Liquidated Damages Provision

Many construction contracts contain liquidated damages provisions. A liquidated damages provision is where the parties to the contract agree to a fixed sum as damages for the breach by one or both of the parties. It is a common misunderstanding, that the party making a claim for breach of contract must prove that they were damaged in order to recover under a liquidated damages provision. Under Maryland law, however, where a valid liquidated damages clause exists, a party need only prove a breach of the contract. Proof of damages is not required. Theoretically a party who has not suffered actual damages because of another party's breach may still recover damages under a liquidated damages provision. For further information, please contact Matt Hjortsberg at 410-583-2400 or Hjortsberg@bowie-jensen.com