Can general damages exceed the stipulated liquidated-damages amount where the agreed remedy is unenforceable or inapplicable?
There is no safe universal answer. The court must construe the contract, identify why the liquidated remedy failed and decide whether the stipulated amount also limits general damages for the same delay.
Possibly, but the answer depends on the wording and the legal reason the liquidated-damages mechanism cannot be applied
An express overall liability cap ordinarily governs according to its terms. A liquidated rate is not automatically a cap on general damages, but its wording and commercial function may show that the parties intended to limit delay exposure. If the clause failed because of employer prevention, defective machinery, inapplicability or penalty, each route raises a different construction question. The employer must prove general damages and cannot use its own breach to obtain a contractual advantage.
| Issue | Position |
|---|---|
| Express overall cap | Apply according to its scope and exceptions |
| Agreed rate only | May or may not limit general damages |
| Clause inapplicable | Construction determines the alternative remedy |
| Employer prevention | Own-breach principle may affect the claimed advantage |
| General damages | Breach, causation, remoteness and quantum must be proved |
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