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Liquidated damages in Florida construction contracts

On Behalf of | Dec 2, 2021 | Construction Law

Construction work of any kind is a highly demanding type of labor that almost always involves ample pressure on those who take on the job. There are countless factors that culminate to make it such a trying profession: everything from deadlines, crews, equipment, schedules, to environmental factors that are completely out of the workers’ control. To cope this unpredictability and high pressure, there are some things that any professional working in the Florida construction industry should know, and liquidated damages is at the top of the list.

What are liquidated damages?

Liquidated damages are funds meant to cover the expenses that result from each day that a construction job goes over the completion date that was previously agreed upon. Usually, these liquidated damages come out of the money owed to the contractor at the end of the job. In other words, the construction workers make even less money in an industry that’s already known for its rough profit margins.

It’s important to bear in mind that an owner’s eligibility to have damages liquidated depends on a plethora of legal and procedural requirements. For one thing, it is unlawful for liquidated damages to be used as a tool for coercion.

The daily amount of compensation is something that’s agreed upon between the owner and contractor ahead of time. In order for the damages to be enforceable, all qualifying provisions in the construction contract must be met.

Why liquidated damages are in place

The purpose of these contract clauses is to provide the owner with compensation for the losses that came as a result of the project’s delay. Some people think that these damages are meant to be a way of punishing the contractors, but this misses the mark of what liquidated damages are truly put in place for. This skewed perception of why these types of damages exist is what has led to unlawfully liquidated funds on construction jobs, underlining the importance for contractors to protect their rights.

Working in the construction industry is already hard enough without unexpected delays on projects. Anyone involved in this industry should know how liquidated damages work so they’re prepared for the unpredictable when it inevitably occurs.