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The importance of consequential damages waivers in contracts

On Behalf of | Jul 13, 2022 | Construction Law

There are many clauses and parts of a construction contract. The basic parts state the scope of the work that is to be completed, who is responsible for which costs, when the work is to be completed and other basic parts of the contract. There are also usually clauses regarding waivers what the construction company and the property owner will not be responsible for doing or providing.

One type of waiver that is now common in construction contracts is related to consequential damages. These are damages that are related to a breach of the construction contract, but are not directly caused by the contractor. Examples include loss of revenue if the business must shut down for a period of time during the construction. It may also include loss of rent, replacement of furniture or equipment that was destroyed in the construction and other types of damages.

Construction companies push for these waivers because consequential damages can be very expensive in some cases. Owners of the buildings need to be very careful when reviewing and agreeing to any type of waiver of consequential damages. These waivers can and are upheld in court and could cost the owners significant amounts of money.

Ways to negotiate waivers of consequential damages in contracts

There could be some room for compromise on these waivers. For instance, owners may agree to waive some consequential damages, but still have the construction company liable for consequential damages that result from willful conduct. These compromises allow both sides to limit the amount they may be liable for if consequential damages occur.

Consequential damages can occur any time a construction company in Florida causes a loss during a construction project. The dollar amount of the damages varies, but they can be very costly. With the unknowns surrounding the types and amounts of consequential damages, both the owners and construction company have an interest in limiting their liability. That is why the contract negotiation is so important. Experienced attorneys understand the potential fallout from construction contracts and may be a useful resource.