Drafting Liquidated Damages Provisions in Construction Contracts: Limiting Owner's Remedies, Establishing Damages Caps
Defining Delay With Substantial Completion, Ensuring Consistency With Subcontractor Agreements

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Transactions
- event Date
Wednesday, January 17, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will provide construction counsel with practical skills on drafting legally enforceable liquidated damages clauses. The panel will address what limits should be included, particularly limiting these damages as the sole owner remedy and defining delay, and how to draft consistent clauses across the prime contract and all subcontractor agreements. The panel will also discuss the necessities in liquidated damages provisions that overcome claims of unenforceable penalty.
Faculty

Mr. Adelstein represents general contractors, subcontractors, design professionals, developers, associations, suppliers, sureties, and owners in a myriad of construction matters including, without limitation, construction/design defect claims, schedule-based claims (including inefficiency, lost productivity, and acceleration claims), bid protests, payment disputes, lien and bond claims, liability and property insurance issues, and a host of other issues that affect the construction industry. He prepares and negotiates construction contracts for clients utilizing AIA, EJCDC, and AGC industry form documents, as well as contracts that are not based on an industry form document.

Mr. Hyman represents owners, contractors, design professionals, and materialmen. He offers practical legal solutions to complex construction issues at every phase of a project including contract formation, on-the-job claims, delay and critical path scheduling disputes, default, termination, and litigation or dispute resolution. Mr. Hyman also handles niche issues related to government construction projects, having represented government entities and contractors in a variety of those disputes. He is a trial lawyer at heart and has led trial teams as first chair attorney on dozens of jury and nonjury trials with a sterling record of success.
Description
Few concepts in the construction industry are as universally and fundamentally misunderstood as liquidated damages. Counsel must understand the basic definition of a legally enforceable liquidated damages clause. Liquidated damages are a reasonable projection of actual damages likely to be sustained in the event of a delay, particularly when the actual damages would be difficult to determine. When both parties sign a contract with a liquidated damages clause, they accept the reasonableness of the liquidated damages.
Construction counsel should consider that the goal of a proper liquidated damages clause is to limit damages to a fixed and predetermined amount. The clause should expressly state that recovering liquidated damages is the owner's sole and exclusive remedy in the event of such a delay. Best practices dictate the use of a liquidated damages clause in conjunction with a mutual waiver of consequential damages.
Liquidated damages clauses should expressly define the event of delay that triggers the ability of the owner to assess liquidated damages against the contractor and negotiate a cap on liquidated damages, ideally tied, in some measure, to the contractor's anticipated profit on the contract. Construction counsel for contractors should consider a survival clause in the event of termination so that an owner anticipating far greater, actual delay damages than is provided for in the clause may seek to avoid the limitations of the clause by terminating the contractor.
While it seems counterintuitive, the liquidated damages provision in the prime contract should not likely be cut and pasted into all subcontracts. Counsel should consider prime and subcontractor relationships and needs and craft separate liquidated damages provisions in subcontracts that address those specific concerns.
Listen as our expert panel discusses best practices for drafting and negotiating a liquidated damages provision in a construction agreement. The panel will address the practical considerations of what should be included.
Outline
- Liquidated damages provisions
- Unenforceable penalties
- Sole remedy of the owner
- A fixed and predetermined amount
- Waiver of claims
- Delays
- Termination
- Survival
- Subcontractor agreements
Benefits
The panel will address these and other key topics:
- How does an enforceable liquidated damages provision differ from an unenforceable penalty?
- How are the liquidated damages limited as the owner's sole remedy?
- How can delays and termination clauses be included in the liquidated damages provision?
- What changes to the liquidated damages provision should be considered in a subcontract?
Unlimited access to premium CLE courses:
- Annual access
- Available live and on-demand
- Best for attorneys and legal professionals
Unlimited access to premium CPE courses.:
- Annual access
- Available live and on-demand
- Best for CPAs and tax professionals
Unlimited access to premium CLE, CPE, Professional Skills and Practice-Ready courses.:
- Annual access
- Available live and on-demand
- Best for legal, accounting, and tax professionals
Related Courses

Rooftop Solar Leases: Due Diligence, Negotiation, and Drafting Considerations for Landlords and Tenants
Monday, May 19, 2025
1:00 p.m. ET./10:00 a.m. PT

Title Insurance Coverage for Real Estate Counsel: ALTA Coverage and Endorsements for Owners and Lenders
Friday, May 16, 2025
1:00 p.m. ET./10:00 a.m. PT

Allocating Operating Expenses in Commercial Real Estate Leases: Negotiating Strategies for Landlords and Tenants
Thursday, May 8, 2025
1:00 PM E.T.
Recommended Resources
Explore the Advantages of Consistent Legal Language
- Learning & Development
- Business & Professional Skills
- Talent Development
How to Build a Standout Personal Brand Without Sacrificing Billable Hours
- Career Advancement