Liquidated Damages Risk Checker in California Construction Contracts
Liquidated damages clauses set a fixed daily penalty for missed completion dates. Poorly negotiated LDs can wipe out an entire project margin in weeks — courts uphold them as long as they're not an unenforceable penalty.
Presumed valid in commercial contracts; the burden is on the challenger.
California Civil Code §1671(b) — enforceable unless the party seeking to invalidate shows it was unreasonable at the time made
Typical exposure per project when a LDs clause slips into a signed contract.
CA presumes validity — record your rationale, but you're on strong ground.
Push back with a §1671(b) unreasonableness challenge if the rate exceeds credible daily overhead.
Drop your contract PDF — we'll flag LDs risk in seconds.
Vowpace's AI extracts liquidated damages language, redlines it against safer alternatives, and generates an audit-grade evidence report — free for your first scan.
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The clause we flag — and the one we help you write instead.
“Contractor shall pay Owner the sum of Ten Thousand Dollars ($10,000) per calendar day for each day beyond the Substantial Completion Date, without regard to cause.”
“Contractor shall pay Owner liquidated damages of Two Thousand Dollars ($2,000) per calendar day of unexcused delay beyond the Substantial Completion Date, subject to a cap of five percent (5%) of the Contract Sum. Excusable delays (force majeure, owner-caused, differing site conditions) shall extend the completion date on a day-for-day basis.”
- 1Always negotiate an aggregate LD cap (typically 5–10% of Contract Sum).
- 2Push for a mutual excusable-delay clause with a defined force majeure list.
- 3Require Owner to prove actual damages remain difficult to estimate — otherwise LDs become an unenforceable penalty.
Scan your California contract for LDs traps — free.
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