Liquidated damages vs. Indirect damages?
Hello,
A101 Sec.3.3.3 mentions "Liquidated damages", in case the Contractor fails to meet the Substantial Completion dete.
However, A201, Sec.15.1.7 clearly prevents the Owner from rising such claims, in the "Waiver of Claims for Consequential Damages".
See screen cap.
The two sections see to contradict each other.
Aren't the same type of damages being discussed here?
Thank you
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Thank you Valerie, and Gang.
So, "if any" means: "If the Contractor and Owner agree to any fixed, estimated cost / damage, at execution of the contract"?
It does not mean: "If the Owner incurs in any damage due to Contractor not meeting completion date".
In other words, if the O and C agree in defining some kind of Liquidated damages, they can do so within the contract A101 sec.4.5. However, if they DO NOT specify any Liquidated Damages, then the Owner cannot file claims seeking relief for Consequential Damages because the contractor missed the completion date (A201 sec.15.1.7).
So:
Liquidated damages = damages proactively negotiated (estimated) in A101 sec.4.3 to cover possible Consequential Damages (which would be hard to asses).
Consequential Damages = actual costs or losses the Owner may incur or suffer because the contractor missed the agreed completion date (these are hard to asses).
Then it appears that the Owner should definitely include some Liquidated Damages listed under A101 sec.4.5, otherwise, later, he will not be able to sue for Consequential Damages...
Am I understanding this correctly?
Thank you
Regards
gio
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The key words here are "if any" in A101 Sec.3.3.3. This section is talking about if the owner and contractor has agreed on a certain amount of Liquidated Damages. For example, the contractor is to pay the owner $1,000 for each day delayed, but normally the owner has to agree to pay the same amount of reward ($1,000) per day if the contractor finished early.
This specific clause of the contract has to be expressly agreed to in writing in the contract.
Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)
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Yes, if the owner and contractor has modified the standard AIA contract and added a very specific amount for liquidated damages, it will overwrite the standard contract.
Yes, clauses stipulating that liquidated damages as a certain cost per day must be accompanied by a BONUS PROVISION by the same cost per day, otherwise it will not hold up in court. The two parties in the contract have to be treated equally.
Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)
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