The source of writing this article happened by a question whether as compensatory measure Penalty (or) Liquidated (or) Unliquidated damages be awarded. The above question views the meaning of the aforesaid concepts as concepts derived from three different sources, which at a point I felt to have derived from a single source. The literal meaning of a word or concept can be understood, felt and derived from its source – the question why was the word adapted?. The origin or the birth or the source is the right place to get the exact true answers for all the questions, that which can stand as self-explanatory and undeniable.
The birth place behind adaption of every new concept happens through a formula whether it is “Same” or “Similar”?. The importance in adapting a new concept occurs when comparing two situations with the above formula, whether the situations are “Same” or “Similar”? Considering the aforesaid concepts as “Similar” let us start with the question which concept originated first?, because a birth can only happen from an existing one. The question also guides us straight to the mentality of the author who derived these concepts. When some situation is defined to be “similar” but not the “Same”, the importance of “Naming” it differentiated it from the existing. Likewise was the birth of the concepts “Liquidated” and “Unliquidated” damages from the existing concept “Penalty”.
The concept “Penalty” exists from ancient times wherein “Liquidated” and “Unliquidated” damages are concepts of modern world. Penalty is brought to action when a certain act is unadhered, which ought to be adhered. Penalty as to one’s act as consequence or compensatory are quoted expressly as Law. The lack in including all the acts of the modern world, which is obviously not a question of inclusion as those acts, was not in existence when such a concept Penalty was derived and defined. The question under what preview such acts be considered to rule the limits of defining the concept Penalty as a compensatory measure, lead to the formula in calculating concept Penalty by estimating the damages caused by those acts.
Further concerning the unpredictable acts of that time or of the future the scientific analysis of defining the concept Penalty, sought stability at all times of human existence. The concept Penalty has and was not changed but a formula was introduced to calculate the limits of compensation by extracting it from the damages caused by the act and those formulas were named as “Liquidated” and “Unliquidated” damages. The words (Liquidated & Unliquidated) that named the formulas were self explanatory and the purpose of securing stability at all times of human existence shall reach its height, only when the theme behind the adaption and the literal usage is understood. The damages that can be estimated accurate, did fall under the formula of Liquidated damages and the damages with inaccurate estimation, as Unliquidated damages.
As simple conclusion the concepts Liquidated and Unliquidated damages, resulted form a single source concept Penalty and acts as a formula to calculate the limits of Penalty – the one and only compensatory measure. Further they are not concepts adapted to term the compensatory measure in a different sense. The true meaning of the concept is arrived by stating it as Penalty “as” Liquidated/Unliquidated damages instead of stating it as Penalty “or” Liquidated/Unliquidated damages.
- By Sabarish Jayaraman
