What Is the Threshold for 'Pass-through' Liquidated Damages?

摘要

In the face of lengthy project delays, legal disputes often arise over the ubiquitous liquidated damages clause contained in most construction contracts. Because owners are unable to predict, prior to project commencement, the amount and extent of damages that would result from a delay in completion, contractors typically agree to pay a fixed daily sum in the event of a delay. Prudent contractors also "flow down" these types of provisions in their subcontracts, giving them the ability to require a subcontractor to pay its pro rata share of the liquidated damages attributable to the subcontractor's delay. But there is an interesting question that can sometimes arise: can a contractor collect liquidated damages from a subcontractor if the owner has not assessed them against the contractor? This month's case, Costello Construction of Maryland, Inc. v.J.D. Long Masonry, helps answer that question.