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This is much in line with the discussion in the previous chapter, but has a few points of difference sufficient to justify its use here. Another form introduces features not included in the previous chapter:
E. The City shall have the power to vary, extend, increase or diminish the quantity, to change the order or type of work, or dispense with a portion thereof at any time without impairing the contract, without changing the unit prices to be paid, without in any way impairing the bond or releasing the sureties thereof; and no payment of any kind will be made on account of work not done. In case of reduction of amount, due to change in plans, if the total sum paid to the Contractor for the whole work done on the given contract is as much as ninety per cent of the estimated sum which would have been paid if no change had been made, no allowance will be due except payment for actual amounts done; but if the total amount is less than ninety per cent, an allowance will be made, and will be paid by the City on account of administration and plant costs, such amount to be fixed by the City. In case of increase in amounts of work, payment for the whole quantities at the unit prices bid for the work of the classes so increased, shall be full and complete compensation for the work done, no matter how much increased. In case the change involves the execution of work of a class not herein provided for, the Contractor shall, on direction of the City, perform same as provided for in the following article under the clause “Unclassified Work.”
Another form somewhat similar in purpose is this:
F. An increase or decrease in said amount of work to be done shall not constitute grounds for damage or anticipated profit claims, the Contractor being entitled only to compensation for the actual work done at the prices named.
A section is introduced in many Contract forms providing for liquidated damages. No clause of this sort is found in the Uniform Contract Form of the preceding chapter. A place usual for such a clause is closely following a statement that “time is of the essence of this Contract.”
59. In case the work embraced in this contract shall not be completed by the time herein appointed, the Contractor shall pay to the Commonwealth as liquidated damages and in full compensation for such delay, the sum of twenty-five dollars ($25.) for each and every day beyond the time herein stipulated for the completion of the work, until said work shall be completed.
Other forms provide:
A. Which sum is agreed upon, not as a penalty, but as fixed and liquidated damages for each day of such delay, to be paid in full and subject to no deduction. If the payments due the Contractor are less than the amount of such liquidated damages, the Contractor and his surety shall pay the balance to said Commission.
B. It is therefore covenanted and agreed that in case the said Contractor shall fail or neglect to complete the work herein specified on or before the date hereinbefore fixed for completion, the said Contractor shall and will pay the said City the sum of Fifty Dollars ($50.) for each and every day the Contractor shall be in default in the time of completion of this contract. Said sum of Fifty Dollars ($50.) per day is hereby agreed upon, fixed and determined by the parties hereto as the liquidated damages which said City will suffer by reason of such defaults, and not by way of a penalty. In case the said Contractor does not complete the work covered by this contract on or before the time specified herein for the completion of the said work, the Engineer shall decide the number of days the said Contractor is in default, and the decision of said Engineer shall be final and binding upon both parties hereto. It is further agreed that if said Board shall accept any work or make any payments under this contract after any such default, such acceptance, payment or payments shall not in any respect constitute a waiver or modification of any of the provisions hereof, and particularly the provisions in regard to Time and Liquidated Damages for delays.
C. The date of completion will be fixed by the date upon which the Director of Public Service shall finally inspect and issue to the Contractor a statement of acceptance of the completed structure.
Another form reads:
D. Which sum of fifty dollars ($50.) per day, in view of the difficulty of perfectly estimating the damages due to delay, is hereby agreed upon as the liquidated damages that the Commission will suffer by reason of such delay, and not as a
E. The amount or amounts thus withheld shall not be considered a penalty, but shall be considered liquidated damages, which are fixed and agreed to hereby in advance by the contracting parties as the actual cost to the City of such delay.
It is doubtful whether this would be upheld if evidence should be offered to show that the sum stated was in fact unreasonable. The court might not refuse to admit such evidence even under this agreement.
It is well established as a matter of law that for a breach of Contract (and a failure to complete in time is such a breach) the remedy is the payment of the damages actually suffered. The courts seem to have found reason to resist the fixing of any other measure of damages, and they especially object to a penalty for non-performance. The use of the words “liquidated damages” does not remove the difficulty; if the court thinks that in fact the sum stated (or any provision named) is in effect a penalty, it will refuse to sustain it.
There are two cases where “liquidated damages' meet the approval of the courts. First : where the parties to a Contract have in advance computed, ascertained, and agreed upon a sum as “liquidated damages.” Second : where the amount of damage cannot be definitely determined and a sum is fixed and stated as “liquidated damages.” In this second case, however, the sum so fixed must appear to the court to be reasonable; other
wise the court will regard it as a penalty. In construction Contracts, where blank forms are provided for a number of bidders, it can hardly be maintained that the parties have beforehand computed and ascertained the damage; it should, however, be true that the liquidated damages mentioned are reasonable in view of the losses from the delay. Any attempt to overdo the matter, or to put undue pressure on the Contractor in this clause is likely to result in the court's decision that a “penalty” is provided. The court will look beyond the words and determine the essential fact whether the provision does effect a penalty.
The following readings apparently attempt to cover the essential requirements:
F. It is understood and agreed that Time is of the essence of this contract, and that a failure on the part of said Contractor to complete the work herein specified in the time herein specified, will result in great loss and damage to said City, and that on account of the peculiar nature of such loss and damage it is difficult, if not impossible, to accurately ascertain and definitely determine the amount thereof.
Said sum of Fifteen Dollars ($15.00) per day for default in the time of complete delivery of all said metal work is hereby agreed upon, fixed and determined by the parties hereto as the liquidated damages which said City will suffer by reason of such default, and not by way of a penalty.
G. Time of completion is of the essence of this contract and should the Contractor fail to complete the work within the number of days specified in his proposal, he shall be liable to the City, for each additional working day until completion of the work, the amount named in the Instructions to Bidders as the daily cost of inspection and daily value of the use of the completed work, which said amount per day was considered in determining that the Contractor was the lowest and best bidder. Said amount per working day will be deducted from the moneys which may be due the Contractor from the City, not as a penalty, but estimated and hereby agreed as liquidated and fixed damages to the City from failure to complete the work at the time specified; time of completion of the contract being an essential element in the consideration. In case the Director of Public Service grants an extension of time to the Contractor, the said amount per working day will be computed from the date to which the time is extended, until the actual completion of the work.
It is further agreed that the permitting of the Contractor to complete the work or any part of it after the time fixed for its completion shall in no wise operate as a waiver on the part of the City of any of its rights under this contract.
Another form provides for:
H. Liquidated damages $25. per day and in addition thereto the cost of the time of supervision and inspection during the interval of time between the contemplated and actual date of completion of said work.
The objections are unusually well met in the following:
I. It is mutually understood and agreed by and between the parties hereto that considerable damage will be sustained by the City in case the Contractor does not complete this contract within the time herein provided for completion, but that it will be difficult, if not quite impossible, for the City to establish either the full extent or the amount of said damage under the ordinary rules of evidence. It is, therefore, understood and agreed by and between the parties hereto that the payment by the Contractor to the City of the sum of One Hundred Dollars ($100.) per day for every day the Contractor fails to substantially complete the work to be done under this contract, according to the terms hereof, will be a fair and reasonable compensation to the City for the damage sustained by it by reason of failure so to complete said contract; and that the payment of such sum by the Contractor will not, in any way, constitute the infliction upon him of a penalty by the City. It is further understood and agreed by the parties hereto that the Contractor shall pay to the City, as liquidated damages and not as a penalty, etc.
It would be difficult to overcome this as a matter of law, unless the sum stated should seem to the court clearly unreasonable.
A reading which apparently will stand (in view of the discussion of Article 26) is as follows:
J. If the Contractor fails to complete the work in accordance with this Contract and Specifications at the time specified, he shall pay to the Company for each and every day thereafter including Sundays and holidays that the completion is delayed, such sum not exceeding . . . . . dollars ($...) per day as the Chief Engineer shall determine to be the reasonable damages suffered.
This provides for reasonable damages and provides a means for their determination which the courts consistently sustain as lawful.
The provision for liquidated damages is probably introduced oftentimes in Contracts as a spur to urge Contractors to finish on time. Even for this purpose, the amount stated should not be in excess of the reasonable damages.
The opinion has often been held by Engineers and others that if liquidated damages are specified for delay, a premium must also be specified for completion at a date earlier than provided in the Contract. Such opinion is not well founded. In some cases such a provision is reasonable and wise, in other cases not. The following form provides:
K. If the Contractor fails to fully and entirely complete and finish the work in conformity to the terms and provisions of these specifications, he shall pay to the City the sum of fifty dollars ($50.) for each and every day thereafter, including Sundays and Holidays that the finishing of the contract is delayed, which sum shall be construed as stipulated and liquidated damages and not as a penalty . . . and if the Contractor shall fully complete the same before the time specified, he shall receive an extra or additional payment of twenty-five dollars ($25.) etc.
In this connection many Contract forms provide for delays from various causes. The quotations below from various sources are self-explanatory:
60. Should the Contractor be obstructed or delayed in the commencement, prosecution or completion of the work hereunder by any necessary or unavoidable act or delay of the Board, or unavoidable acts or delays on the part of railroads in transporting material consigned to said Board, or by riot, insurrection, war, pestilence, acts of public authorities, fire, lightning, earthquake, cyclone, or through any default of other parties under contract with said Board, and if, in the opinion of the Engineer, the ultimate completion of the entire work under this contract is delayed thereby, then the time herein fixed for the completion of all work under this contract shall be extended for a period equivalent to the time said work as a whole is, in the opinion of the Engineer, thereby delayed.
A. If legal obstructions to the prosecution of the work arise, the delay shall operate to extend the time for the completion of the part or parts of the work obstructed, for the length of time the obstruction continues and no longer, but no damages shall be claimed or allowed the Contractor for any such delay.
B. But no injunction, strike or interference of public authority shall be ground for such extension except if and from the time when the Contractor shall give the Commission notice of the injunction or other cause of delay, with copies of the injunction or other orders and of the papers upon which the same shall have been granted. The Commission and the City or either shall be accorded the right to intervene or become a party to any suit or proceeding in which any such injunction shall be obtained, and to move to dissolve the same or otherwise, as the Commission or the City may deem proper. If necessary the Corporation Counsel or the Counsel to the Commission or both shall be authorized by the Contractor to appear, for that purpose, as counsel or attorneys for him.
. C. Neither an extension of time, for any reason, beyond that fixed in the Bid for the completion of the work, nor the acceptance of any part of the work called for by this contract shall be deemed to be a waiver by the Commission of the right to abrogate this contract for abandonment or delay, in the manner provided for in Article L in this agreement.
D. Whenever, within the limits of the contract time as fixed in the Proposal or as amended by any modification of the contract, the temperature, between the hours of six (6) A.M., and six (6) P.M., as officially recorded by the Dayton office of the U. S. Weather Bureau, shall register thirty-two (32) degrees Fahrenheit or lower, the Contractor will be granted an extension of contract time of one day for each such day of cold weather.
Whenever, within the limits of the contract time, fixed as previously noted, floods in the local rivers, or other unforeseen acts of Providence, operate to delay the completion of the work, the Board may extend the time of this contract by such amount as may be certified in writing by the Chief Engineer to be just.
Rainy or stormy weather will not be regarded as proper grounds for the extension of contract time, except when excessive or prolonged.
Many classes of work need not be suspended on account of frost.
E. In the event that any material alterations or additions are made as herein specified, which, in the opinion of the Engineer will require additional time for the execution of all work under this contract, then, in that case, the time of completion