The enforcement of liquidated damages is a topic that gets a lot of attention in construction-contract disputes. Some of the most popular posts on this blog include examples of courts refusing to enforce liquidated damages provisions. (Click here for one example and click here for another example.)
One reason a court may refuse to enforce a liquidated damages provision is because the specified daily rate of liquidated damages is “grossly disproportionate” to the actual damages that are expected to be suffered due to the contractor not completing the project on time.
In addition, even if a liquidated damages clause is enforceable, it is possible that an owner can waive the right to claim liquidated damages. Under Florida law, to establish waiver, a party must show an intention to give up a known right. A waiver can be express or implied through conduct.
A federal court recently considered whether a project owner waived its right to seek liquidated damages as a matter of law.