Damages specified in a contract representing a genuine pre-estimate of compensation due for an anticipated breach of contract, (e.g. delay in completion). They are usually expressed in agreed sums per week. Liquidated damages are only levied when reasons for delay do not entitle the party concerned to an extension of time. Liability insurers specifically exclude any liability to pay liquidated damages or penalties.

The risk that an individual or business will be unable to meet its financial obligations from its cashflow. This may lead to an entity having to quickly convert assets into cash at considerable loss or becoming insolvent.