How do the owners collect the liquidated damages from the contractors during construction?
How do the owners collect the liquidated damages from the contractors during construction?
Liquidated damages are the method of sharing risk between the owner and the contractor and are awarded for the damages and monetary losses incurred during breaching of a contract. The liquidated damages have a fixed amount negotiated by the parties during formation of the contract. The liquidated damage amount is charged when the contractor fails to meet deadline and is taken directly from the money that the contractor owes for his work with the owner. So, the collection of the liquidated damages from the contractor is done by deducting the amount directly from the money that the contractor owes for the work.
The liquidated damages are liable to disagreement between the contractors and owners which may result in lawsuit, where the court takes the decision for the enforcement of the damages. The collection of liquidated damages in such case is liable to the court judgement.
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