The owner moved to set aside the jury’s verdict claiming that liquidated damages of 30% were disproportionate to the contractor’s actual damages, which were at most 20%
Liquidated damages clauses are generally enforceable, but most courts will not enforce a liquidated damages provision if (1) it constitutes a penalty as opposed to a reasonable estimate of the actual damages likely to be incurred due to delay, or (2) the party benefitting from the liquidated damages clause is responsible for a portion of the delay to completion of the project and the contract does not provide for apportionment of damages in the case of mutual delays
By Bill Wilson of Robinson+Cole Published on August 3, 2022 The purpose of a liquidated damages provision in a construction contract is to establish in advance a fair amount of compensation to the injured party for a breach of contract to avoid spending time and money fighting over uncertain actual damages after they occur. Generally, to be enforceable, a liquidated damages provision must satisfy three criteria: (1) the damages resulting from a breach of contract must be uncertain when the parties enter the contract; (2) the parties must clearly express their intent to liquidate damages in advance; and (3) the amount stipulated for liquidated damages must be reasonable and commensurate with the actual damages it is meant to represent.
If the party asserting liquidated damages meets this burden, the party opposing liquidated damages (usually the Contractor) can defeat the liquidated damages provision by presenting evidence that there is an “unbridgeable discrepancy” between the actual damages and liquidated damages (i.e., that the actual damages would be significantly less than the liquidated damages)
Kiefer of Pepper Hamilton LLP Published June 3, 2020 A federal court in Penna. found a liquidated damages provision unenforceable where the per day liquidated damage amount was copied from contracts for prior unrelated projects rather than a project-specific forecast of likely damages. The case was D.A. Nolt, Inc. v
By Brian Dobbs and Wearen Hughes of Bass, Berry & Sims PLC Published September 18, 2020 While neither of the recent cases discussed below establishes new law, they serve as good reminders of principles and requirements that can be important to participants in construction projects in Tennessee. The first case, Sifuentes v. D.E.C, LLC , addresses the effects on a subcontractor’s remedies of not being licensed as a contractor as required in Tennessee. The second case, Clark v. Givens , involves the effect of a construction agreement not containing a “time is of the essence” provision
In a typical employer contractor relationship, if the project is delayed by matters for which the contractor is responsible (non-excusable delay events), then the contractor may find itself liable to the employer for damages. Damages payable to an employer for late completion of a construction project are commonly referred to as liquidated damages
Through a liquidated damages provision, contracting parties agree in advance to the amount of losses or damages the non-breaching party will suffer in the event of a breach. Liquidated damages provisions are typically utilized for construction delays because damages resulting from a delay are hard to define or calculate, thus providing the parties with increased certainty in the event of a breach
The subcontract at issue contained an indemnification provision that stated, in relevant part, that Subcontractor would “indemnify and hold harmless [GC] from any against claims, damages, losses and expenses, including but not limited to its actual attorneys’ fees incurred, arising out of or resulting from performance of” the subcontract.
Nussbaum of Saiber LLC Published September 19, 2022 In New Jersey, the “economic-loss doctrine” bars tort claims when the plaintiff’s only damages are economic in nature because, when parties enter into a contractual relationship, a contractual remedy flows from contract, not tort