Liquidated damages are intended to compensate a project owner for a contractor’s late completion of the work. What happens, however, when the contractor’s delay is concurrent with owner-caused delay? Traditionally, the owner’s contribution to late completion bars any recovery of liquidated damages. This rule has resulted in part from judicial antipathy toward liquidated damages, an attitude that has dissipated over the decades. Today, apportionment of responsibility is the prevailing approach.
A California appeals court was presented with a situation in which a trial court denied a project owner any liquidated damages, suggesting recovery was barred by the owner’s concurrent delay. The appellate court said apportionment of responsibility would have been more appropriate, but the owner had the burden of proving entitlement to liquidated damages. And, the owner had presented no scheduling evidence that would have made apportionment possible.
The second case in this issue involves responsibility for interior tenant improvements in a new commercial building. Those improvements were excluded from the contractor’s scope of work. However, the contract’s Changes clause was triggered when the owner directed the contractor to perform the improvements. This obligated the contractor to follow the procedures stipulated in the clause.
The third case addresses a Montana statute establishing an alternative dispute resolution procedure encouraging pre-litigation settlement of residential construction disputes. The state Supreme Court ruled the statute did not create a new legal cause of action for “construction defects.”
