liquidated damages
noun · Vertragsstrafe
Vertragsstrafe if the clause exerts pressure on performance, pauschalierter Schadensersatz if it merely fixes the expected loss. German law enforces both, the void English penalty has no German twin.
Which translation, when
Why
English drafting lives on the line between liquidated damages and the unenforceable penalty. German law does not draw that line: § 339 BGB allows a real contractual penalty, pressure included, and § 343 BGB lets a court reduce an excessive one instead of striking it out, between merchants not even that, § 348 HGB. So the German choice is not enforceable versus void but Vertragsstrafe versus pauschalierter Schadensersatz, pressure versus pure compensation, and standard terms police the two differently, § 309 no. 5 and no. 6 BGB. Translate liquidated damages as Vertragsstrafe and you may have written a harder clause than you drafted.
Typical mistakes
- Liquidierte Schäden is not German legal language, it is translation residue. A German lawyer reads it and knows the text was never checked.
- Vertragsstrafe and pauschalierter Schadensersatz are policed differently in standard terms, § 309 no. 5 and no. 6 BGB. The wrong label can void the clause.
- Between merchants the court cannot scale a Vertragsstrafe down, § 348 HGB excludes § 343 BGB. Advising a client that a German judge will soften the figure is wrong for B2B.
What matters
A supply agreement heading for a German counterparty, a delay clause with a daily rate: the German word decides which regime applies. Write Vertragsstrafe and the clause may bite harder than your English original. Write pauschalierter Schadensersatz in standard terms and the buyer must stay free to prove a smaller loss, § 309 no. 5 BGB.
What the machine misses
Machine output renders liquidated damages as Vertragsstrafe almost without exception, and the German word carries the penalty inside it. The line your English drafting draws between the enforceable pre-estimate and the void penalty vanishes in translation, and the German reader sees a pressure clause you may never have meant to write.
Examples
| to agree liquidated damages | eine Vertragsstrafe vereinbaren |
| the liquidated damages become payable | die Vertragsstrafe wird verwirkt |
| a liquidated damages clause | eine Vertragsstrafenklausel |
| capped liquidated damages | eine der Höhe nach begrenzte Vertragsstrafe |