Construction Contract – Article Interpretation What does the following mean in…

Construction Contract – Article Interpretation
What does the following mean in layman’s terms (especially the 2nd sentence)? Taken from the Schedule provision of construction contract. I am ‘Subcontractor’; big bad General Contractor is ‘Contractor.’

”If Subcontractor should default in performance of the work or otherwise commit any act which causes delay to the prime contract work, Subcontractor shall be liable for all losses, costs, expenses, liabilities and damages, including consequential damages and liquidated damages, sustained by Contractor, or for which Contractor may be liable to Owner or any other party because of Subcontractor’s default. Except to the extent Contractor or Subcontractor are liable to any third parties for liquidated damages or consequential damages, and have a right of contribution or indemnification by the other by way of law or contract for which each shall remain responsible, Contractor and Subcontractor waive claims against each other for consequential damages or liquidated damages arising out of or relating to this Subcontract.”

One thought on “Construction Contract – Article Interpretation What does the following mean in…

  1. Re: Construction Contract – Article Interpretation
    If you don’t understand a contract clause, it is always legitimate to ask for clarification and a written rewrite or written explanation. Here, there is a waiver of liquidated/consequential damages except to the extent they are related to third parties. Liquidated damages refers to a clause where people agree that its really hard to calculate how badly they will get hurt if the other party does some bad act and so they are agreeing up front to an amount (e.g. $500 per day for construction delay). In this case, the contractor is shifting/limiting liability for liquidated damages in two directions: (1-re third parties) onto the subs to the extent the subs caused the problem/delay and (2-between contractor & sub) limiting the ability for contractor/sub to claim liquidated or consequential damages against one another. This is a way of creating greater predictability concerning risk of potential liabilities under the contract.

    Disclaimer: This explanation relates only to the language presented in the posting and is not intended to create an attorney-client relationship or be specific legal advice, but only to provide general education concerning the issues presented. For specific legal advise, you should have an attorney review the entire agreement in its entirety.

    Cathy Cowin
    Law Offices of Cathy Cowin
    2344 Tulare Street, Suite 300
    Fresno, CA 93721

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