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ABSTRACT 

The construction sector is a vital driver of foreign investment and global economic growth, with India experiencing a significant influx of foreign direct investment (FDI) in recent years. This growth trend is expected to continue, with China, the United States, and India leading global construction expansion by 2030. Within the realm of construction contracts, the concept of liquidated damages plays a crucial role in addressing delays and breaches. These clauses offer a structured mechanism for compensating parties affected by breaches, reducing disputes, and minimizing litigation costs. However, their enforceability hinges on reasonableness and the genuine pre-estimation of potential damages. Indian law provides guidance on the permissibility and limitations of liquidated damages, emphasizing reasonableness and burden of proof. Additionally, mathematical principles like the Hudson and Emden Formulas have emerged to quantify unliquidated damages more precisely. This text highlights the construction sector's significance, the importance of reasonable liquidated damages clauses, and evolving methodologies for assessing damages, emphasizing the sector's pivotal role in global economic development.

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