It’s crucial for construction workers to understand the fine print in their contracts, especially when it comes to damage liquidation. In construction contracts, liquidated damages are a specified sum of money that is to be paid to the signer if the terms of that contract are breached. When a project is delayed or goes on longer than the contract specified, it often leads to damages for the workers involved. Liquidated damages clauses are there to ensure that construction industry workers receive fair compensation promptly.
These types of construction law provisions are there to financially protect those in the construction industry in the event that a project is delayed beyond the original scope of the contract. This is a common practice both in private and public contracts.
Provisions that protect workers
A key advantage to these liquidation provisions is that the benefiting party isn’t tasked with proving the damages themselves. The contractor only has to establish that the project was delayed by the performing party to have their damages liquidated. This is helpful because legally proving damages is a tedious and often lengthy process that delays the liquidation process.
In construction law, there are several scenarios in which liquidated damages are not enforced. A common one is when the reported damages are blown out of proportion and don’t accurately reflect the damages that truly occurred. Courts also won’t enforce damage liquidation if the claimant is found to be in some way responsible for the damages. Some contracts make an exception to this, but the vast majority do not.
There are many things to consider when going through the liquidation process for damages in construction. Although the calculations involved in evaluating these damages are often complex, liquidated damages clauses are there to clearly articulate the harmed party’s rights in that situation and the appropriate actions moving forward.