A

The following clauses may properly be shown here:

57. The rates of progress herein required have been purposely made low enough to allow for the ordinary delays incident to construction work of this character, and liberal times have been estimated for special delays at certain points. No extension of time will be made for ordinary delays and accidents incident to construction work of this character, and the occurrence of such will not relieve the Contractor from the necessity of maintaining these rates of progress.

In case of an extension by the Board, of the time for the completion of this Contract, a revised schedule of progress will be made in accordance with such extension of time.

The question has been raised whether the consent of the surety is necessary in case of an extension of time. The basis of the premium paid on Bonds, as has been stated, is now the amount of the Contract, and in general there is no time limit. The Uniform Contract Form provides that the Contractor shall indemnify and save harmless the Company against all claims, etc. Under this clause, a year or two after the Contract was physically completed a claim might be made for personal injuries sustained during the conduct of the Contract, and in consequence of it. The Contractor would be under obligation to indemnify the Company and the surety would also be liable on his Bond if the Contractor failed to indemnify. In a similar way, if there is no time limit on the Bond, the surety will be held for any provision of the Contract, such as for any ordinary delay or extension of time, as a matter of course. For any extraordinary extension of time, the surety will doubtless be held if such extension is authorized by the Contract. It may be advisable to notify the surety of any extraordinary extension of time. If such extension is due to additional work, and there is any question as to whether this additional work comes within the Contract as "extra work," the consent of the surety should be secured.

A. The Contractor hereby assumes the risk of the occurrence of delays in the prosecution and completion of the work embraced in this contract; and the amounts hereinbefore mentioned to be received by the Contractor in payment for the work include and cover that risk, and therefore the Contractor shall be entitled to no additional compensation on account of any such delays.

Although it is common to provide in the Instructions to Bidders, or in the Proposal, or in both, that the quantities specified are approximate, it seems desirable that the Contract should contain such a provision and thus be complete in itself. A suitable place for such a provision is immediately following the schedule of prices, but it may be put in any convenient part of the Contract.

There are various readings:

58. It is further agreed that the quantities of work to be done and the materials to be furnished, as given in the accompanying Information to Bidders, are for the purpose of comparing, on a uniform basis, the bids offered for the work under the Contract.

A. These quantities are approximate only, being given as a basis for the uniform comparison of bids, and the City does not, expressly or by implication, agree that the actual amount of work will correspond therewith. An increase or decrease in these quantities shall not be regarded as sufficient ground for an increase or decrease in prices, nor in the time allowed for the completion of the work except as specifically provided hereinafter.

A more elaborate provision is shown below:

B. It is expressly understood and agreed that the quantities of the various classes of work to be done and materials to be furnished under this contract, specified in the Contractor's Proposal, are approximate and only for the purpose of comparing, on a uniform basis, the bids offered for the Work under this contract; and neither the City, nor the Commission, nor any member of the Commission, is to be held responsible that any of the said estimated quantities shall, by reason of inaccuracies, or changes in the Work, be found even approximately correct in the construction of the Work; and the Contractor shall make no claim for damage or anticipated profit, or for loss of profit, because of a difference between the quantities of the various classes of work actually done or materials actually delivered, and the estimated quantities stated in the Contractor's Proposal or because of the entire omission of any of the quantities of items stated in the Contractor's Proposal.

If a more concise clause is desired the following is suggested:

C. It is understood and agreed that the estimated quantities of the various classes of work or materials specified in the proposal are approximate and for the purpose only of comparing the bids on a uniform basis and the Contractor shall make no claim for damages for anticipated profit, or for loss, or otherwise against the City or any member of the Board because of any difference between said estimated quantities and the quantities actually done or furnished.

The following clause has been used:

D. The Contractor agrees that the estimated quantities in the Notice to Contractors are only for the purpose of comparing on a uniform basis the bids offered for the work under this contract, and he further agrees that he is satisfied with and will at no time dispute the said estimated quantities as a means of comparing the bids aforesaid; that he will make no claim for anticipated profits or for loss of profit because of a difference between the quantities of the various classes of work actually done or of the material actually furnished and the said estimated quantities; and he agrees that neither the parties of the first part, nor the Board, or any of them are held responsible if in the construction of the work any of the said estimated quantities should be found to be not even approximately correct.

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 penalty.

A more concise reading in use is this:

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