In a recent post I talked about a liquidated damages provision in construction contracts. I participated in a panel on this very topic devoted to discussing the application and enforceability of liquidated damages provisions. I was involved in discussing the application of liquidated damages provisions in terminated contracts, in addition to the flow-down of liquidated damages with downstream trades. A portion of my powerpoint presentation is below.
It’s important to remember that when dealing with the assessment of liquidated damages, circumstances are fact specific and strategic decisions are fact specific. These considerations are important based on the extent of the liquidated damages assessment and your own claims relative to delay or the manner in which the liquidated damages were assessed.
Questions to consider when dealing with liquidated damages:
- What does the contract say regarding liquidated damages?
- What is the rate of liquidated damages and total assessment amount?
- Is there a legitimate argument based on the jurisdiction to attack the assessment of liquidated damages as an unenforceable penalty (and, if so, can actual damages be asserted that may be proven to be more than the assessment amount)?
- When was notice given regarding the assessment of liquidated damages?
- What are the factual circumstances / factual context in which liquidated damages are being assessed?
- Is there excusable delay that needs to be considered?
- Has an expert been engaged to support excusable or concurrent delay — rebut liquidated damages–or, should one be engaged as soon as possible?
- Was the contract terminated and, if so, can the argument be made that the termination was not proper (substantively and/or procedurally per the contract)?
- Are liquidated damages still accruing and, if so, is there an argument as to the unreasonableness of the continued accrual?
- Are there other factual considerations to support that (i) the liquidated damages are being assessed as a penalty, or (ii) should be reduced or offset?
Please contact David Adelstein at email@example.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.