Sample Construction Contract Liquidated Damages Clause

A sample construction contract liquidated damages clause is an essential component of any construction agreement. It specifies the amount of money that the contractor must pay to the owner in the event of a breach of contract.

The liquidated damages clause is intended to compensate the owner for the damages that they may incur if the contractor fails to complete the work according to the terms of the agreement. These damages may include lost rental income or additional construction costs. The clause helps to establish a fixed amount of damages in advance so that all parties understand the potential consequences of a breach.

Here is a sample construction contract liquidated damages clause:

“Liquidated Damages. In the event that the Contractor fails to complete the Work within the time specified in this Agreement as modified by any written modifications only if submitted in accord with the change order provisions of this Agreement, the Contractor shall pay to the Owner the sum of $_____ for each day that the Work remains uncompleted beyond the time specified in this Agreement, until final completion and acceptance of the Work by the Owner.”

This clause specifies the amount of liquidated damages that will be assessed for each day of delay beyond the agreed-upon completion date. The amount of the liquidated damages will vary depending on the contract and the nature of the project.

It is important to note that liquidated damages are not intended as a penalty for the contractor. Rather, they are a reasonable estimate of the damages that the owner may incur as a result of the contractor’s failure to complete the work on time.

When drafting a liquidated damages clause, it is important to ensure that it is reasonable and reflective of the actual damages that may occur. A clause that is seen as punitive or excessive may be unenforceable.

In conclusion, a sample construction contract liquidated damages clause is an important component of any construction agreement. It helps to establish a fixed amount of damages in advance in case a breach of contract occurs. It is important to ensure that the clause is reasonable and reflective of the actual damages that may occur.

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