Cite as: 515 U. S. 189 (1995)
Opinion of the Court
over its liability for respondents' loss. In our view, however, this fact carries little weight. If interest were awarded as a penalty for bad-faith conduct of the litigation, the City's argument would be well taken. But prejudgment interest is not awarded as a penalty; it is merely an element of just compensation.
The City's "good-faith" argument has some resonance with the venerable common-law rule that prejudgment interest is not awarded on unliquidated claims (those where the precise amount of damages at issue cannot be computed). If a party contests liability in good faith, it will usually be the case that the party's ultimate exposure is uncertain. But the liquidated/unliquidated distinction has faced trenchant criticism for a number of years.9 Moreover, that distinction "has never become so firmly entrenched in admiralty as it has been at law." Moore-McCormack Lines, Inc. v. Richardson, 295 F. 2d 583, 592 (CA2 1961).10 Any fixed rule allowing prejudgment interest only on liquidated claims would be difficult, if not impossible, to reconcile with admiralty's traditional presumption. Yet unless we were willing to adopt such a rule—which we are not—uncertainty about the outcome of a case should not preclude an award of interest.
9 "It has been recognized that a distinction, in this respect, simply as between cases of liquidated and unliquidated damages, is not a sound one." Funkhouser, 290 U. S., at 168 (citing Bernhard v. Rochester German Ins. Co., 79 Conn. 388, 398, 65 A. 134, 137-138 (1906); 1 T. Sedgwick, Measure of Damages § 315 (9th ed. 1912)). See also General Motors Corp. v. Devex Corp., 461 U. S. 648, 655-656, n. 10 (1983); D. Dobbs, Law of Remedies § 3.6(3) (2d ed. 1993); C. McCormick, Law of Damages §§ 51, 54-56 (1935); Rothschild, Prejudgment Interest: Survey and Suggestion, 77 Nw. U. L. Rev. 192 (1982).
10 A number of Circuits have rejected its applicability, at least as an absolute bar. E. g., Borges v. Our Lady of the Sea Corp., 935 F. 2d 436, 444 (CA1 1991); Hillier v. Southern Towing Co., 740 F. 2d 583, 586 (CA7 1984), cert. denied, 469 U. S. 1190 (1985); Norfolk Shipbuilding & Drydock Corp. v. M/Y La Belle Simone, 537 F. 2d 1201, 1204-1205, and n. 1 (CA4 1976); Moore-McCormack Lines, Inc. v. Richardson, 295 F. 2d, at 594.
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