Liquidated damage assessments can frequently become contentious. Contractors bid and sign contracts without fully appreciating how fast these daily charges can add up. In one recent case, the contract called for a daily assessment for late completion of the overall project plus a daily charge of $42 per unit for each of the 30 housing units covered by the contract. The contractor incurred almost $100,000 in liquidated damages for unit-based delays.

There was an interesting twist to this case. The contractor was entitled to an extension of time because of government design changes to one of the 30 units. The government issued a contract modification extending the completion deadline for that one unit, while maintaining the original contract deadline for the other 29 units. The contractor signed off on the change order, leaving unanswered the interesting question of whether the government can mandate a partial or severed extension of this nature.

Other cases this week involved an insurance agent’s oral binder on a builder’s risk policy and lien rights for engineering and soil testing services. The unequivocal oral binder was enforceable against the insurance carrier. Exclusions in the written policy did not apply to the insured property owner. And, although engineering and soil testing were lienable services, they were not “visible improvements” for purposes of taking priority over a subsequently recorded mortgage deed.