Issues Impacting Enforceability Of Liquidated Damages In Construction Contracts

Liquidated damages are a sum specified in a contract as the measure of recovery in the event of a breach of the contract. 

Liquidated damages provisions are common in construction contracts to guard against damages that the owner or a contractor might suffer if a project is delayed beyond the completion date set forth in the contract.  These provisions appear in both public and private construction contracts.  Oftentimes, the owner of a construction project will include a liquidated damages provision in the prime contract with the general contractor.  The provision might state, for example, that if the project is delayed beyond the required completion date, the owner may assess against the general contractor liquidated damages in the amount of $1,000.00 per day until the project is complete.  The general contractor, in turn, will likely include a similar clause in its subcontracts passing along the risk of liquidated damages to its subcontractors if delays to the