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Liquidated Damages

Discussion in 'Business & Corporate Matters' started by Sal6801, Jun 27, 2021.

  1. Sal6801

    Sal6801 Law Topic Starter New Member

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    Jurisdiction:
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    I received a Contract. The first page includes the start and end.

    After that the next line indicates.

    Liquifated Damages of: $500 Per day

    There is no Clause peragraph in the contract indicating details.

    The amount of days is more than enough to finish the project. But my question is: Shouldent the Contractor include a Cluase?
     
  2. Tax Counsel

    Tax Counsel Well-Known Member

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    A clause for what? Without reading the actual contract and knowing what the contract is about, I cannot comment much on what should or should not be included. So a little more detail on this would be helpful.
     
  3. Sal6801

    Sal6801 Law Topic Starter New Member

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  4. Sal6801

    Sal6801 Law Topic Starter New Member

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    I added a few sheets of the draft contract I received.
     
  5. Sal6801

    Sal6801 Law Topic Starter New Member

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    Last sheets added
     

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  6. Tax Counsel

    Tax Counsel Well-Known Member

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    Well, I wasn't anticipating that you would upload the entire contract, and the names of the parties should have been redacted before you uploaded it. In any event, the contract appears to be pretty detailed. If your question is whether the liquidated damages indicated in the summary on the first page should have been discussed in more detail in the body of the contract, then my answer is that would certainly make the contract much better because as it is it is not clear what the liquidated damages would be for, i.e. what particular act(s) of the parties would trigger the liquidated damages clause and how the number of days would be determined. That does not necessarily mean the liquidated damages part is not enforceable, but it could mean that a court would end up applying it differently than you think it would be applied. It would be far better to get the details of that spelled out in the contract.
     
    Michael Wechsler and Sal6801 like this.
  7. adjusterjack

    adjusterjack Super Moderator

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    One would hope so. Unfortunately, there are many things that can delay the completion of a project well beyond the required completion date. Some would be beyond your control.

    Since the contract is only a draft, you have the option of countering with a modification of any of the terms and conditions that bother you. You would be wise to have an attorney review the contract and address those issues.
     
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  8. Michael Wechsler

    Michael Wechsler Administrator Staff Member

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    I agree with my colleagues above. It is possible that the liquidated damages clause may be unenforceable, which might be the case when the actual damages are readily ascertainable and the liquidated damages represent an unreasonable penalty. As mentioned above, while a separate clause might make terms clearer, if they are sufficiently clear on its face and do not revolve around the aforementioned possible exception to the general rule, you may have a difficult time trying to challenge the terms.
     
  9. zddoodah

    zddoodah Well-Known Member

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    It appears that a general contractor has sent you a draft subcontract for some sort of construction work that you are going to perform. I can see that the draft subcontract says that the work is supposed to be completed by 11/15/21, and that there is a vague reference on the first page to liquidated damages of $500 per day. According to you, there is no text in the contract that discusses liquidated damages. Is that about right?

    And your question is whether the vague reference at the top of the subcontract is sufficient to make the liquidated damages enforceable if you don't finish by the stated date. Also correct?

    If so, the answer is that there's no real way to know without reviewing the entire document. I see that you've uploaded 13 documents, but I'm not going to dig through that volume of material out of the goodness of my heart (I also looked at a couple pages and they opened up very small, and I couldn't get them to enlarge). You should take the document to a local attorney or simply request a change to the draft.

    What I can tell you, however, is that the face page of that subcontract is incredibly normal looking. It is incredibly common to have that sort of reference to liquidated damages on the first page. You also need to be careful because your subcontract probably incorporates the general contractor's contract with the owner, so you need to know what that contract says also.
     

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