Understanding who’s liable when a contract is breached is necessary within construction disputes. Whether caused by the owner or the contractor, the damages and delays that occur within an active project need contractual clauses. With no emergency funds or binding agreements set aside, who’s at fault could become a debate. Liquidated damages is a mitigation option in construction law. Texas gives project owners the right to pursue a worker for damages.
When liquidated damages become relevant
Each day that passes where a construction project is extended past its date of completion, there are damages or errors that call for additional expenses. Material, rental and contractual needs are expenses even when no one is laboring. Deadlines are financially binding; therefore, missed deadlines require that more funding be found. Liquidated damages, being what fund an overdue project, consist of money set aside for the event of a setback.
Sure, project errors could be caused by a project’s owner, but liquidated damages come when the fault is a contractor’s. Misconduct, negligence and fraud could be charged against a contractor who knowingly or unprofessionally causes damage. Contractors who must extend their time due to errors they’ve made are an example of how a project qualifies for liquidated damages. Filing a motion for the funds, however, must not be done solely to punish a contractor.
Offering confidence and security
In construction law, “a loss, detriment, or injury to a person or a person’s rights or property,” are the legal elements that justify a claim for liquidated damages. The compensation paid as liquidated damages is issued under these guidelines:
- A specified amount per day
- A mutual agreement between both parties
- A clause that can clearly be enforced
Construction law in Texas
The closer a project is to completion, the less that liquidated damages is an option. Liquidated damages is not to simply punish a contractor. If severe neglect has been involved, then you have a right to have a contractor remedy the issue or cover your costs to do so.