Liquidated Damages Risk Checker in Illinois 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.
Enforced when reasonable at time of contracting.
Illinois: enforced under Grossinger Motorcorp v. American National Bank, 240 Ill. App. 3d 737
Typical exposure per project when a LDs clause slips into a signed contract.
Illinois is LD-permissive but expects reasonableness. A daily rate approximating actual carrying costs is safe.
In IL, an LD provision without any cap on aggregate exposure is your top negotiation target.
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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.
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