We are not aware of any legally imposed limit on Liquidated Damages. A liquidated damages clause is a means of ensuring that you are compensated if the party you hired fails to do the job. However, for these damages to be upheld in court, the calculations must be reasonable. An enforceable liquidated damages clause precludes the recovery of any other damages even if such damages are not covered by the liquidated damages clause. When there is a breach of contract, it … We are preparing a contract for construction of an aircraft maintenance hangar.  Where a contract expressly provides a party can recover both liquidated and actual damages, the liquidated damages provision will be unenforceable. Liquidated damages are predetermined penalties assessed against importers that have violated the conditions of their Customs bond. still deduct liquidated damages? Using a liquidated damage provision is the easiest way for an owner to calculate the losses that they can recover if a project is not completed on time. What Are Liquidated Damages? Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract. The amount of the liquidated damages is supposed to be the parties’ best estimate at the time they sign the contract of the damages … Use a maximum amount or a maximum period for assessing liquidated damages if these limits reflect the maximum probable damage to the Government. Liquidated damages cannot be a penalty for the agency to club the contractor into compliance with punchlist, warranty, paperwork or other requirements that do not affect the use of the project as contemplated by the contract. Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract. Example: Amount of Liquidated Damages shall not exceed 10% of the contract value. Moreover, liquidated damages must be a reasonable attempt to approximate the actual damages. Is there a legal limit to the maximum amount of Liquidated Damages to be applied? These damages will be charged on a daily basis until the project is finished. The whole idea of liquidated damages is that it is a pre-estimated amount which the parties have agreed shall be paid on the occurrence of some event. Basics of Liquidated Damages. Use a maximum amount or a maximum period for assessing liquidated damages if these limits reflect the maximum probable damage to the Government. Liquidated Damages (LDs) are treated very differently across the Gulf region and from the position as understood within the English common law jurisdiction. It should include a clause that sets out the specific amount of damages you are to receive if a specific type of breach occurs. In relation to construction contracts, the event is usually failure by the contractor to complete by the completion date specified in the contract. Liquidated damages are a fact of life when it comes to construction contracts. Liquidated damages calculation can be extremely difficult, especially because it can be hard to prevent future losses. A liquidated damages clause specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract.