Cian BrennanFounder, Quantum Contract Solutions · Founder

Are Your Construction Contracts Putting You At RISK Of Liquidated Damages?

Name: Are Your Construction Contracts Putting You At RISK Of Liquidated Damages?
Uploaded: 2025-04-06T22:00:07+00:00
Duration: 36 s
Channel: Cian Brennan
Description: Contractors and owners often agree to liquidated damages clauses without limits, which can balloon into massive penalties. Cap daily or weekly damages at…

6 Apr 2025 · 1 min

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Contractors and owners often agree to liquidated damages clauses without limits, which can balloon into massive penalties. Cap daily or weekly damages at 1% of contract value, with an overall ceiling of 5% to 10%, to contain your risk and know exactly what you're exposed to.

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The worst thing that you could do is sign really high LDs that are way more than 1% of the contract value that is unlimited and just keeps rolling over and gathering, getting bigger and bigger and bigger. That's what we don't want. What we want to do is reduce our exposure to maximum of 1% per day or per week, depending on what the metric is and the size of your contract and the duration of your contract. And then you want to limit at 5 to 10% of the contract value. So at least, you know, you can put a bucket around your risk and you know what that risk is going to be. And you also know that 1% is pretty reasonable. So if you know this was way higher than 1%, you know that they're pushing the boat here a little bit, and that just gives you an understanding, and that limits your downside.