Liquidated damages is the pre-determined amount of compensation you have to pay the client if you finish the project late (i.e if you do not finish the project within the contract period).
Usually, liquidated damages are set at:
(a) the amount of rent being paid by the owner to live away from the site; or
(b) the amount of rent that the owner could get if the premises were leased.
TIPS:
1. Never cross out the part of the contract that specifies the amount of liquidated damages
2. Never write “$0” as liquidated damages
3. Try and keep liquidated damages as low as possible – even “$1 per week” is fine
4. If the owner insists on having a substantial amount of liquidated damages, then you can also negotiate the same amount being paid to you as a bonus if you complete the project earlier than the date of practical completion
This entry was posted on Saturday, September 26th, 2009 at 1:38 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.