What is liquidated damage under English law?

Liquidated damages are a pre-agreed amount of money that is specified in a contract to be paid by one party to the other in the event of a breach of contract. The amount of liquidated damages is typically an estimated amount of the damages that may be suffered by the non-breaching party in the event of a breach. The amount of liquidated damages must be a genuine pre-estimate of the loss that may be suffered and must not be a penalty.