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Paul Davies. JC Smith's The Law of Contract (2018 2 ed). p. 466

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I'm trying to understand the etymology of the function words in the definition of 'liquidated damages'. I read Is liquidate(-tion) inspired by the French word, "liquide" (cash)? and Liquid Metaphors in the World of Finance.

  1. Am I correct that Alain Pannetier's explanation of limpidity (clarity, transparency) explain "liquidated"? Large commercial parties who like commercial certainty would obviously like to "to set out clearly" a sense now obsolete damages. To wit, they like to have damages liquidated.

    The meaning is already present in the Latin liquidus which means both "liquid" and "clear, evident".

    This obviously comes from liquids being limpid (transparent). Limpid by the way (another Latin cognate, originally from Oscan origin) gives Spanish limpido and limpiar.
    Also liquare means "to filter". So that the idea of transparency and purity is already strongly associated with liquids in Latin.

    From clarify you then get the financial aspect: to clarify a balance sheet: assets and liabilities.
    This is attested in France in the 16th century, and in England in the 17th century (OED liquidate v. 1). It is also used in the sense of selling all one's possessions (19th century).

  2. But I don't wholly agree with how liquid is related to limpidity. Obviously transparent liquids (pure water) are limpid, but translucent and opaque liquids (sauces, bodies of water) aren't. Thus can someome help with my distrust in the semantic shift from "liquid" to "limipidity"?

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I believe the metaphor is liquid versus solid, rather than limpid versus opaque. When assets are liquid, they can be moved or transferred immediately, in the form of money—just as liquids run easily and quickly. When they are not liquid, they are stuck in some form that is not immediately transferable into money, such as a building, stocks, or long-term credit.

The purpose of liquidating assets is turning them into money and using that for something else, not (primarily) making them easy to analyse/comprehend. Cf. liquidity: if a bank does not have enough liquid assets available (money and similar), it may not be able to pay out money to clients quickly enough (even if it has enough other assets), which can be a huge problem.

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