A sum of money that a contractor agrees to pay for project delays is referred to as:

• A. liquidated damages
• B. a tariff
• C. a default
• D. backcharges

Answer: (A)

Liquidated damages are a pre-agreed monetary compensation in a contract to cover planned-for losses if the project is delayed. By fixing an amount for delays, the owner and contractor know the cost of lateness upfront and can enforce timely performance without needing to prove actual damages for each delay. This mechanism is meant to be a fair forecast of potential losses, not a penalty.

Tariffs are duties on imported goods, unrelated to contract delay remedies. A default refers to failing to meet contractual obligations in general, not specifically a pre-set payment for delays. Backcharges are actual costs charged after the fact to cover owner expenses caused by delays or other issues, not a pre-arranged amount.