When one thinks of liquidated damages in a construction contract, an assessment for late completion of the project comes to mind. But, liquidated damages can come in many forms. If actual damages will be difficult to measure precisely and the parties predict, at the time of contract formation, what those damages might be, the resulting stipulated amount will be enforceable.

A liquidated damages clause in a recent Minnesota case did not pass muster. The private construction contract, drafted by the contractor, said that if the owner terminated the agreement for any reason, the owner would owe the contractor a “consulting fee” of 20 percent of the contract price. The clause was an unenforceable penalty because the fee was arbitrary and not tied to foreseeable actual damages the contractor might incur as a result of termination.

Other cases this week involve an engineer’s effort to recover for extra work and a design/build contractor’s attempt to hold a design consultant responsible. The engineer had no written contract modification. Alleged promises by public employees were of no help. And, shortcomings in the contract documents prevented the design/build contractor from reaching the consultant.