Definition of liquidating
Damages can be liquidated in a contract only if (1) the injury is either "uncertain" or "difficult to quantify"; (2) the amount is reasonable and considers the actual or anticipated harm caused by the contract breach, the difficulty of proving the loss, and the difficulty of finding another, adequate remedy; and (3) the damages are structured to function as damages, not as a penalty. A penalty is a sum that is disproportionate to the actual harm.
If these criteria are not met, a liquidated damages clause will be void. It serves as a punishment or as a deterrent against the breach of a contract. "One View Too Many." Boston Bar Journal 34 (April).n.
These payments can be issued to stockholders if a company claims bankruptcy or when company management sells off the assets of the company upon liquidation and subsequently passes the proceeds on to the company's shareholders.
liquidate c.1575, "to reduce to order, to set out clearly" (of accounts), from L. The meaning "wipe out, kill" is from 1924, possibly from Rus. Where did you obtain the money that you applied to liquidate, or partially to liquidate, your debts?
of liquidare "to melt, make liquid or clear, clarify," from L. Sense of "clear away" (a debt) first recorded 1755.
Early 2001 witnessed the end of the line for Tennessee-based retailer Service Merchandise, a 42-year-old chain of catalog showrooms that proved unable to compete with large discounters such as Wal-Mart.
As applied to a company, (or sometimes to the affairs of an individual,) liquidation is used in a broad sense as equivalent to "winding up;" that is, the comprehensive process of settling accounts, ascertaining and adjusting debts, collecting assets, and paying off claims.
Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract.
Instead of a distribution from retained earnings, stockholders receive a return of capital.
Also a distribution of assets from a company that is going out of business.