Florida Court Rules that Construction Contract Clauses Are Unenforceable

1. The court found that the no-damages-for-delay clause in the contract between Sarasota County and Southern Underground Industries, Inc. was enforceable, and the contractor was not entitled to additional compensation for the 71-day delay caused by the county’s stop-work order.

2. The court also found that the liquidated damages clause in the contract was enforceable, and the contractor was liable to the county for a fixed amount per day for the delay in completing the project.

3. Despite the contractor’s efforts to prevent future damage and obtaining an insurance policy to cover any homeowners’ claims, the county’s refusal to withdraw the stop-work order constituted a breach of contract, and the contractor was entitled to damages for the loss incurred during the project’s suspension. 1. The trial court found that the county breached the contract by refusing to compensate the contractor for a 71-day delay, awarding the contractor about $640,000.
2. The no-damages-for-delay clause in the contract did not apply because the county had actively interfered with the project, according to the court.
3. Sovereign immunity did not prevent the contractor from receiving delay damages for work performed to achieve the contract result, as ruled by the court.
4. The liquidated damages provision was unenforceable because it was “grossly disproportionate” to any damages expected from the contractor’s breach, so the court reversed that part of the trial court’s decision. 1. Contractors can potentially get around a no-damages-for-delay clause by proving that the project owner actively interfered with the contractor’s ability to complete the project on time.

2. In the Southern Underground case, the owner’s suspension of the contractor’s performance on the project helped the contractor successfully argue against the no-damages-for-delay clause.

3. While liquidated damages clauses are usually enforceable, the damages awarded to an owner for delay must not be grossly disproportionate to the actual damages suffered.

4. If it can be shown that an owner did not suffer any damages due to the untimely completion of a project, courts are more likely to find the liquidated damages provision unenforceable.

https://www.kirwinnorris.com/florida-court-finds-no-damages-for-delay-and-liquidated-damages-clauses-unenforceable/