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Construction disputes and liquidated damages in Texas

On Behalf of | Feb 9, 2022 | Construction Disputes

When you’re working on a construction project in Texas, it’s important to be aware of the potential for liquidated damages. This remedy is designed as a predetermined punishment for breach of contract. Here’s what you need to know.

What are liquidated damages?

This kind of damage is a type of penalty that involved parties can invoke if a company fails to meet its obligations under a contract. Liquidated damages are intended to provide a measure of compensation for the other party in the event of a breach. They can be specified in the contract or set by law.

How do liquidated damages impact construction projects?

The purpose of liquidated damages is to provide confidence and assurance in cases in which there is uncertainty about how much damage has actually been done. This allows both parties to avoid costly and time-consuming construction litigation. For instance, if you cause any delay in completing a project, you could face significant financial penalties as per the terms of your contract.

What can you do to avoid liquidated damages?

To protect yourself from this type of damage, you should:

  • Make sure to understand your obligations under the contract, and take all necessary steps to meet them.
  • Communicate with your contractor and other stakeholders as often as possible, so everyone is aware of any potential delays or issues.
  • Keep track of the progress of the project, and make sure that you provide regular updates.

What should you do if you have been assessed liquidated damages?

If liquidated assets for a construction project have already been imposed on your company, it’s essential that you consult with an attorney who specializes in this area of law. He or she may advise you on how best to proceed and whether there is any recourse available to deal with the breach.

You will also need to contact the other party and try to negotiate a settlement through mediation or arbitration. If that doesn’t work, you may want to consider legal action. Even if you could be at fault, the other party may take advantage of your mistake, so you must protect yourself.

Liquidated damages can be a powerful tool in a construction dispute. If you’re facing a breach of contract, it’s worth considering whether liquidated damages may be the right solution for you.