ART - Enforceability of Liquidated Damages Clauses 2012

The document provides guidance on drafting liquidated damages clauses in contracts. It emphasizes the importance of avoiding the use of the term "penalty" in the clause, as it does not help with the characterization of the damages. The document suggests involving the user and other functional experts in calculating the amounts to align with industry practices. It also recommends including a memorandum that describes the considerations in the types of damages, using available wage or consultant rates to quantify the hourly costs associated with oversight and inspection during any delay. The document advises listing the types of oversight, inspection, and project management activities that would be required in case of delays or other breaches. It suggests supplementing the general rate memoranda for normal project delays with additional liquidated damage amounts for other damages, such as lost revenues or the cost of interim facilities. The author of the document, Richard Pennington, is a retired attorney with expertise in public procurement law.