Final answer:
Liquidated damages is the amount predetermined by the parties to a contract as the total compensation to an injured party if the other party breaches the contract.
Step-by-step explanation:
The amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract is called liquidated damages. Liquidated damages are a specific sum of money agreed upon by both parties in advance, usually based on an estimate of the potential losses that may be incurred due to a breach of contract. It serves as a form of protection for the injured party and provides certainty in terms of the damages they would receive.
For example, in construction contracts, there may be a provision for liquidated damages if the project is delayed beyond a certain deadline. This predetermined amount would compensate the party that suffered the loss for the additional expenses or damages caused by the delay.