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The basics of liquidated damages

The commercial construction industry in Idaho requires plenty of resources and work to actually see a return on investment. And so, when a business person or company makes a deal with a contractor, they might want to protect themselves by including a liquidated damages clause in their contracts.

Understanding the liquidated damages clause

One of the biggest risks in construction projects is the failure to meet deadlines. The purpose of the liquidated damages clause is to establish a set amount of money that the breaching party will have to pay as a result of any delays. This pre-determined amount generally reflects the estimated losses that the non-breaching party would incur.

Advantages and disadvantages

The liquidated damages clause in your contract creates a sense of urgency for both parties to complete the project on time. If the contractor is aware that the law requires them to pay a sum of money for any delays, they are more likely to be diligent in meeting deadlines. For the business owner or company, this clause provides some level of protection against any potential losses that could arise from delays.

The main drawback of the liquidated damages clause is that it can sometimes be difficult to estimate the actual losses that may occur as a result of any delays. As such, the amount stated in the contract may not always accurately reflect the actual damages incurred. In addition, if the contractor is unable to complete the project on time because of unexpected circumstances beyond their control, the court would still need them to pay the stipulated amount even though they are not at fault.

Claiming liquidated damages claim in Idaho

If a contractor has breached the terms of your contract and caused delays, you may have the right to claim liquidated damages. To do so, you will need to provide evidence of the losses you have incurred because of the delays. This could include documentation such as financial statements or invoices. With that information, you can proceed with your claim in construction litigation.

The amount of liquidated damages that you have the right to receive will depend on the terms of your contract. This is a separate process from filing a lawsuit against the contractor. Even if you win your case in court, you will still need to file a separate claim to recover any damages that the contractor may owe you.