This paper reviews the rules concerning enforcement of the contract liquidated-damages clause. The literature indicates that the clause will be enforced if: 1) the daily amount bears some resemblance to the actual damages that could be reasonably foreseen at the time the contract was written; and 2) the damage amount is difficult or impossible to estimate. In regards to reasonableness, courts will not allow the owner to use the clause to force the contractor to complete the project on time or punish the contractor if he or she is late. The issue of difficulty in predicting the potential damages is relatively minor. Estimates should be related to the time the contract was signed. A number of cases were found in which the actual damages were substantially more or less than the liquidated sum. This fact did not serve to waive enforcement of the clause. This paper addresses a number of issues related to liquidated damages and the need for assistance of an attorney in some cases.


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Filing Info

  • Accession Number: 00715329
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jan 10 1996 12:00AM