damages legal-terms
Where does the &quot;liquidated&quot; in &quot;liquidated damages&quot; come from?
<p>An <a href="https://law.stackexchange.com/a/61179/7410">answer to a recent question</a> mentions that &quot;all the money you have&quot; is not a valid liquidated-damages clause in a contract.</p>
<p>The main use of &quot;liquidation&quot; that I'm familiar with is in the context of bankruptcy, where it does indeed mean (roughly) &quot;all the money you have&quot;. (Well, strictly speaking it means converting all your assets to cash, with the implication that you then give all the money you have your creditors.)</p>
<p>Are these usages of &quot;liquidated&quot;/&quot;liquidation&quot; related? Or more generally, where does the term &quot;liquidated&quot; in &quot;liquidated damages&quot; come from?</p>

<p>Black's Law Dictionary (5th edition 1979) states that &quot;Liquidated&quot; means</p>
<blockquote>
<p>Ascertained; determined; fixed; settled; made clear or manifest.</p>
</blockquote>
<p>This is the sense of the term in which damages are &quot;liquidated&quot; by a liquidated damages term in a contract or statute. The damages are settled by a contractual determine rather than being &quot;unliquidated&quot; (i.e. uncertain or unresolved or undetermined.)</p>
<p>The sense of the word meaning sold or reduced to money, is derivative of this prior and more fundamental sense of the word. When assets or an estate are reduced to money their fair market value is fixed or settled.</p>
<p>How a word meaning &quot;liquid&quot; came to mean &quot;make clear&quot; when modified is speculative (given what my brief research uncovered), but I think that are some very plausible paths by which that could have happened.</p>
<p>According to <a href="https://languages.oup.com/google-dictionary-en/" rel="noreferrer">Oxford Languages</a>:</p>
<p><a href="https://i.stack.imgur.com/mW3jC.png" rel="noreferrer"><img src="https://i.stack.imgur.com/mW3jC.png" alt="enter image description here" /></a></p>
<blockquote>
<p>liq·ui·date /ˈlikwəˌdāt/</p>
<p>Origin</p>
<p>mid 16th century (in the sense ‘set out (accounts) clearly’): from
medieval Latin liquidat- ‘made clear’, from the verb liquidare, from
Latin liquidus (see liquid). liquidate (sense 1) was influenced by
Italian liquidare and French liquider, liquidate (sense 2) by Russian
likvidirovatʹ</p>
</blockquote>
<p>A <a href="https://www.etymonline.com/word/liquidate" rel="noreferrer">second online dictionary source</a> states:</p>
<blockquote>
<p>liquidate (v.)</p>
<p>1570s, of accounts, &quot;to reduce to order, to set out clearly&quot; (a sense
now obsolete), from Late Latin or Medieval Latin liquidatus, past
participle of liquidare &quot;to melt, make liquid, make clear, clarify,&quot;
from Latin liquidus &quot;fluid, liquid, moist&quot; (see liquid (adj.)). Sense
of &quot;clear away&quot; (a debt) first recorded 1755. The meaning &quot;wipe out,
kill&quot; is from 1924, possibly from Russian likvidirovat, ultimately
from the Latin word. Related: Liquidated; liquidating.</p>
</blockquote>
<p><a href="https://english.stackexchange.com/questions/78581/liquidate-in-metaphorical-sense">English.StackExchange</a> has some answers of essentially the same question that doesn't shed much more light on the matter but one excerpt is notable:</p>
<blockquote>
<p>The meaning is already present in the Latin liquidus which means both
&quot;liquid&quot; and &quot;clear, evident&quot;.</p>
<p>This obviously comes from liquids being limpid (transparent). Limpid
by the way (another Latin cognate, originally from Oscan origin) gives
Spanish limpido and limpiar.</p>
<p>Also liquare means &quot;to filter&quot;. So that the idea of transparency and
purity is already strongly associated with liquids in Latin.</p>
</blockquote>

<p><em>Damages</em> are an award to one party when a (legally recognized and approved) loss or detriment is caused by the action or inactions of another party, by requiring <strong>some further action by the second party to compensate the first party</strong>.</p>
<p><em>Liquidation</em> and related words refer to the process of turning assets (usually property of some kind) into their equivalent value in currency, <strong>allowing the value to flow like a liquid</strong> from one party to another party.</p>
<p><em>Liquidated damages</em> are damages which, to be corrected, may require transfer of specific property or services or actions that is legally or physically difficult to do, instead stated in currency as an estimate for the value those properties or services or actions would have provided.</p>
<p>The phrase meanings are definitively linked, in that the adjectival form used in law follows from that used in commerce, and is generalised from one area involving currency to others.</p>

<p>The Oxford English Dictionary (the standard reference source for historical word usage) gives 4 relevant sense and dates of first attestation:</p>
<blockquote>
<p>To make clear or plain (something obscure or confused); to render
unambiguous; to settle (differences, disputes). {1670}</p>
<p>To clear away, resolve (objections). {1620: rare}</p>
<p>To determine and apportion by agreement or by litigation; to reduce to
order, set out clearly (accounts). {1575}</p>
<p>To clear off, pay (a debt). {1755}</p>
</blockquote>
<p>The adjectival form with the sense &quot;Ascertained and fixed in amount&quot; is found as far back as 1609: these are legal uses of the term. The vagarity in senses is in part due to the various figurative meanings in Latin, where the root means &quot;leave; flow; clear&quot;. The ultimate answer would come from studying ancient English legal texts written in Latin.</p>
