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(CDR-3260) Damages Without a Cause: Liquidated Damages Are a Penalty When Owners Recover Damages for Their Own Delay

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Level: Intermediate
Venue: 2019 AACE International Conference & Expo, June 16-19, 2019, New Orleans, LA, USA

Abstract: An owner’s delay has traditionally been recognized as either an absolute or partial contractor defense against an assessment of liquidated damages. However, owners are increasingly employing contractual provisions and arguments that seek to prevent contractors from raising owner-caused or an owner’s concurrent delay as a defense to the assessment of liquidated damages. The law has long declined to enforce liquidated damages provisions which function as penalties. Attempts to preclude contractors from raising owner-caused delay as a defense render the assessment of liquidated damages a penalty.

The paper will discuss the fundamental legal principals related to the enforcement of liquidated damages provisions including the law’s evolving approach to apportioning liquidated damages assessments in the face of the owners’ delay, concurrent or otherwise. Standard defenses against assessments of liquidated damages will be discussed. In addition, a legal framework for contractors to challenge arguments that they have waived their ability to raise the owner’s concurrent delay as a defense to an assessment of liquidated damages will be presented. The paper also will provide recommendations for how contractors can best position themselves to defeat an assessment of liquidated damages.