Where a contract fixes the sum payable on breach, the usual battles over loss, mitigation and remoteness largely fall away — but only if the clause survives scrutiny. This chapter begins with liquidated damages clauses and what a valid clause spares the innocent party from proving, before turning to the penalty rule: the distinction between primary and secondary obligations, the modern two-stage test built on legitimate interest and proportionality, and how the test plays out between commercial parties of equal bargaining power. It then examines debt claims, including the effect of entire obligations and substantial performance on recovery of the price, alongside equitable set-off, limitation and statutory interest. It closes with deposits and part-payments, and why the difference between the two determines whether money already paid can be kept or must be returned.
