In contractual terms what is the difference between Liquidated Damages and Penalty?

Liquidated Damage is a mutually agreed fixed amount against specified breach of contract; in other words, it is compensating the injured party with a pre-estimated amount of loss. Penalty is an amount, levied on the Party in violation, as a punishment. Liquidated damage is legally enforceable but not a penalty, though some tend to contradict this.

Penalty is undefined and charged adhoc, where as Liquidated Damages are defined and agreed and compensated closer to actual loss suffered

Briefly, both are meant to impose obligations on contractors in event of breach, but penalty are less common nowadays. this is due to some laws/countries  consider it as not enforceable and employer shouldn't make profit out of it. while liquidated damages meant to recover incurred loses reasonably. 

you can consider it as penalty if amount payable (contractor obligation) is higher/greater than the losses or should have to pay. 

Liquidated damages are the damage caused due to the breach of contract or not honoring/performing the contract, which can be ascertained based on the contractual terms and conditions which were agreed in the contract by both the parties.

Penalty is the punishment for breach of contract or non performance or violation of the contract as agreed.