Final answer:
Unliquidated damages are compensation not predefined in a contract, assessed by a court to cover the actual loss suffered due to a breach of contract.
Step-by-step explanation:
Unliquidated damages are a form of compensation that is awarded in breach of contract cases where the exact amount of damages was not predetermined or specified within the contract itself.
In a legal context, these damages are determined by a court to compensate the non-breaching party for losses that are a direct consequence of the breach. Instead of having a fixed sum, which is known as liquidated damages, unliquidated damages are assessed and quantified by the court based on the actual loss suffered.
The main purpose of awarding unliquidated damages is to put the injured party in the position they would have been in if the contract had been fulfilled as agreed.
An example of unliquidated damages could be when a contractor fails to complete a construction project on time, and the client incurs losses due to the delay.
The client may then seek unliquidated damages for the actual costs associated with the delay which could include loss of use or additional rent for alternative facilities.