How do you write a liquidated damages clause?

How do you write a liquidated damages clause?

Sample liquidated damages clause: In the event of delay in [type of project] completion, the [performing party] shall pay liquidated damages to [the owner] in the amount of [dollar amount per day/week, etc.] [or] [“X” percent of the total contract price per day/week, etc.].

What are liquidated damages in a construction contract?

If parties anticipate a kind of breach which is likely to happen, while finalising the contract, they can agree for payment of a specific amount which is called as liquidated damage.

How are liquidated damages calculated in construction?

In order to determine a per diem liquidated damage amount, MWRA then divided each contract’s proportionate share of the extended costs by an estimate of how long each contract would take to perform.

What is an example of consequential damages?

Commonly, consequential damages include property damage, personal injury, attorneys’ fee, lost profits, loss of use, liability of buyer to customers, loss of goodwill, interest on money withheld by customers, and damages related to third party claims.

How would the Court determine whether the liquidated damages clause is valid?

In determining whether a liquidated damage provision is enforceable, a court will look at whether the amount of the liquidated damage is reasonable in light of either: (1) the anticipated loss at the time the contract was entered into; or (2) the actual damages caused by the breach.

Why have liquidated damages in a construction contract?

The purpose of liquidated damages Liquidated damages provide certainty and avoid a dispute regarding the amount to be deducted for the breach, as the right to be paid liquidated damages arises automatically upon the specified breach of contract occurs.

What is the liquidated damages clause?

A liquidated damages clause (or an agreed damages clause), is a provision in a contract that fixes the sum payable as damages for a party’s breach. The Principal function of a liquidated damages clause is to quantify the damages payable in the event of breach of the contract.

How are liquidated damages awarded?

Liquidated damages are a predetermined form of money award. This means that the parties already agreed on the amount of money that would be awarded should one of the parties breach the contract. That contract term is called a liquidated damages clause. In our contract, we have a liquidated damages clause for $10,000.

What is the difference between direct and consequential damages?

Direct damages are damages resulting directly from a breach of the contract whereas consequential damages are damages that are not directly caused by the breach but normally and naturally arise from the circumstances of the non-breaching party.

What is another term for consequential damages?

Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, a breach of contract.