The Assessment of Liquidated Damages under a Construction Contract 17 Mississippi Law Journal 1945-1946

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17 Miss. L.J. 62 (1945-1946)
The Assessment of Liquidated Damages under a Construction Contract

handle is hein.journals/mislj17 and id is 70 raw text is: MISSISSIPPI LAW JOURNAL

THE ASSESSMENT OF LIQUIDATED DAMAGES
UNDER A CONSTRUCTION CONTRACT
E. Kemp Cathcart*
The assessment of liquidated damages is, at this time, a problem of
interest to all persons in the construction business, and to surety com-
panies writing performance bonds on construction work, due to the fact
that practically all contracts now contain provisions for such assessments
under certain defined conditions.
In the past, and before the great increase in the construction and
building trade, the general tendency of the courts seems to have been to
look upon contract provisions for liquidated damages with a certain amount
of disfavor1 and, in many instances, to construe them as penalties not
enforcible against the contractor or his surety.2 It is not the purpose of
this paper to discuss the cases which distinguish liquidated damages from
a penalty. It may be said, however, that while certain states have stat-
utes providing that liquidated damages may be assessed only where the
loss would be impossible of ascertainment, or very difficult of ascertain-
ment,3 nevertheless, there has been a noticeable and gradual change in
the decisions showing a tendency to uphold them rather than to construe
them as being penal in nature. So long as the sum fixed as liquidated
damages is not wholly disproportionate to the loss, the assessment is usu-
ally allowed,4 unless there are other intervening causes which would pre-
vent it; which causes, and their effect, will be hereinafter discussed.
Liquidated damages will not be allowed under the following circum-
stances, even though the amount thereof is not so disproportionate to the
actual loss as to amount to a penalty:
1. Where the owner terminates the right of the contractor to pro-
ceed with the work.
2. Where there has been a total abandonment of the work by a
contractor, thereby requiring completion by another.
3. Where the delay in completion is attributable not only to the con-
tractor, but to the owner as well.
4. Where the evidence is clear and uncontradictable that in spite
of the delay, there was no loss to the owner therefrom.
*Vice-President and Director of Bonding Division, Maryland Casualty Company,
Baltimore.
125 C. J. S., DAMAGES, з 102 (b) ; 15 AM. JuR., DAMAGES, з 245.
2Van Buren v. Digges, 11 How. 771 (U. S. 1850); 15 AM. Jur., DAMAGES,
з 245; 25 C. J. S., DAMAGES, з 102 (b).
325 C. J. S., DAMAGES, з 101.
4United States v. U. S. Engineering Company, 234 U. S. 236 (1914); 3
WILLISrON, CONTRACTS (rev. ed. 1938) з 2210; 15 AM. JuR., DAMAGES, зз 240, 249.

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