If the parties specify in advance the amount of losses or use a formula to assess losses against the breaching party, the damages that would be awarded in the event of a breach of contract would be called liquidated damages. Liquidated damages are a predetermined amount of money that the parties agree to in their contract as compensation for a potential breach. They are different from other types of damages, such as compensatory damages, which are designed to compensate the non-breaching party for their actual losses.
Liquidated damages are typically used when it is difficult to predict the exact amount of damages that might be incurred in the event of a breach, and they are meant to provide a reasonable estimate of those damages.