are liquidated damages exclusive remedy
Assuming liquidated damages are unenforceable because they are a penalty, the relevant party will ordinarily be entitled to general damages for breach. A clause that made liquated damages the party’s exclusive remedy would prevent any claim for general damages. To avoid this outcome, when combining a liquated damages and exclusive remedy clause, the exclusive remedies should be liquidated damages or general damages should the liquidated damages be unenforceable. 1 A liquidated damages clause should accomplish the following: 2  Limit the liquidated damages to a reasonable amount; 3  Set a cap on the amount of liquidated damages, e.g. 50% of the general contractor’s fee; and.  Make the liquidated damages the “sole and exclusive” remedy for late completion. From a contractor’s point of view, liquidated damages are preferred over consequential damages because its exposure to liquidated damages is limited to a known amount, whereas “the sky is the limit” with consequential damages. Contractors Should Limit Their Exposure to Consequential Damages and Ensure Liquidated Damages are the Owner’s Sole and Exclusive Remedy. Date: October 14, 2015 / Author: John P. Ahlers / Categories: Claims, Damages, Delay Claims, Construction News and Notes, Contracting / Comments (0) / Back to Blog. The key components of an exclusive remedy clause are: 1  the trigger events covered by the clause, 2  the remedies which remain available for those trigger events, and.  a clear intention to exclude all other remedies. The contractor will almost always ask for the liquidated damages to be an exclusive remedy. A common formulation for the clause would be that the liquidated damages are an exclusive remedy for the power station’s failure to perform. 1 Limit the liquidated damages to a reasonable amount; 2  Set a cap on the amount of liquidated damages, e.g. 50% of the general contractor’s fee; and.  Make the liquidated damages the “sole and exclusive” remedy for late completion. “Liquidated damages” (sometimes called “stipulated damages”) are damage amounts the parties designate in the contract for the injured party (Owner) to collect as compensation for breach of contract, and are sometimes tied to project completion or milestone dates. Strictly speaking, liquidated damages clauses are not a type of exclusive remedy clause. A liquidated damages clause simply specifies a liquidated damage payable for a breach. The effectiveness of an exclusive remedies clause will be undermined in the event the agreement also contains a cumulative remedies term. See, Contract Remedies - Cumulative versus Exclusive Remedies.
Yes