In a construction contract, there is a 1000 per day estimate of ...

[OSWALD]

In a construction contract, there is a 1000 per day estimate of damages for each day that the contract runs over the completion date. The contractor is 30 days late when the job is completed, resulting in a prospective damage award of 30,000. What is this type of clause, and when will it be enforced?

Question 2

If a U.S. company and an Austrian company end up in a dispute about a contract they entered into that contains an arbitration clause, a case brought before a U.S. court would:
 A) be heard by the U.S. court since arbitration clauses are not popular with such courts.
 B) be heard by the U.S. court if the U.S. company can show it will be harmed by arbitration.
 C) not be heard by the U.S. court because U.S. courts accept arbitration as a form of dispute resolution.
 D) none of the above.

[yuyiding]

Answer to Question 1

This type of clause is known as a liquidated damages clause. Generally this type of clause will be enforced if, at the time of creating the contract, it was very difficult to estimate actual damages, and the liquidated amount is reasonable. In this case, if the total construction contract involved millions of dollars, the estimate of damages may reasonably amount to a 1000 per day. If the construction project is a small one, the court may see this amount as too much and not enforce the clause.

Answer to Question 2

C