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Liquidated damages -- a two-edged sword. (Legal Insights).(delays on construction project)(Brief...

By Stockenberg, Richard A.
Publication: Building Design & Construction
Date: Wednesday, May 1 2002

Delay can cause incalculable damages to an owner on a construction project. Such damages, however, may be very difficult to quantify with reasonable accuracy. Thus, in order to help avoid the uncertainty and expense of long evidentiary battles to establish (or refute) the owner's actual damages, parties to a construction contract may agree in advance to liquidate those damages. A "liquidated damages" clause is a negotiated clause to establish in advance a reasonable estimate of the damages that would be incurred by reason of a breach of contract or unexcused delays.

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