Liquidated Damages Risk Checker in Texas 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.
Generally enforced; struck down only when amount is disproportionate to actual harm.
Texas: enforced as long as damages are difficult to estimate and the amount is a reasonable pre-estimate (Phillips v. Phillips, 820 S.W.2d 785)
Typical exposure per project when a LDs clause slips into a signed contract.
Texas courts scrutinize LDs for reasonableness. Document why actual damages would be hard to prove at contract signing.
If LDs are wildly disproportionate to any credible actual harm, you have a shot at a 'penalty' defense.
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.
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