Southwest Engineering v. United States

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Southwest Engineering v. United States
Court 8th Circuit
Citation 341 F.2d 998
Date decided March 1, 1965

Facts

  • Southwest Engineering Co. ="Southwest" = plaintiff = a construction contractor
  • United States = the federal government = defendant
  • In the 1960s, Southwest & the United States signed 4 contracts with liquidated damages clauses specifying that damages would accrue at a set daily rate for each day the project was late
  • Southwest was late in completing all 4 projects
  • The United States determined that Southwest owed $8,300 in liquidated damages which would be subtracted from Southwest's payments

Procedural History

  • Southwest sued the United States opposing the assessment of liquidated damages.
  • The United States won a summary judgment.

Issues

Is a liquidated damages clause un-enforceable if a contractor's delay in completing a construction project doesn't result in actual damages?

(The United Statement admitted that it didn't sustain damages when the 4 contracts were completed late.)

Holding

No. A liquidated damages clause may be enforced even if the contractor's delay didn't result in actual damages.

Judgment

Affirmed

Rule

Judge Van Oosterhout: The amount of the liquidated damages must be reasonable to be sustained in a court of law; in this case, the aforesaid amount was indeed reasonable.

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