Should Commercial Owners Require Liquidated Damages?

Commercial owners often capitulate when contractors hesitate to agree to liquidated damages for construction project delays. More often than not, owners should demand that contractors accept liquidated damages, in lieu of an owner reserving its rights to seek delay damages through the claims and/or dispute resolution process.

What Are Liquidated Damages?

Liquidated damages ("LDs") are most commonly defined as a contractually agreed-upon amount that is a reasonable estimation of an owner's actual damages if the contractor fails to achieve a particular milestone or substantial completion of a construction project by an agreed-upon date.

• LDs are:
  • usually stated as a per day dollar amount;