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07/02/2018

Editor’s Notes

It was an unusual situation. The contractor finished the project well behind schedule. The federal project owner certified substantial completion but withheld more than $150,000 in liquidated damages from the final payment for late completion. The owner then negotiated contract modifications for extra work, which the contractor performed.


The contractor argued it was entitled to remission of the liquidated damages. By authorizing additional work, the project owner implicitly extended the project performance period and lost the right to assess liquidated damages.


This argument failed. The standard “Time Extensions” clause in federal construction contracts allows a change order to stipulate its own performance period while leaving the performance period for the base contract work unchanged. That was done in this case. The contractor was not entitled to remission of liquidated damages.


The other case in this issue held that a prime contractor could not shift its responsibility for workers’ compensation payments to a subcontractor through an indemnification clause in the subcontract, even though the sub’s negligence caused the injury to the contractor’s employee.

 

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