Which of the following is true about 'Prefixed Damages'?

Prefixed damages, often referred to as liquidated damages, are specific amounts that parties to a contract agree upon in advance as compensation for certain breach scenarios. This predefined compensation is included in the terms of the contract itself, thereby providing clarity and certainty for both parties regarding the financial repercussions of a breach.

By establishing these damages in the contract, the parties aim to avoid potential disputes over what constitutes adequate compensation should a breach occur. This contrasts with other forms of damages which may depend on the actual loss incurred, vary based on litigation outcomes, or may not align directly with the actual losses sustained by the injured party.

In this context, options that imply variability in amounts, negotiation after a breach, or a lack of reflection on actual losses do not accurately represent the concept of prefixed damages. This reinforces why agreement upon a specific amount in the contract is the defining characteristic of prefixed damages.