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In a Contract is there provision to deduct both Liquidated Damages and Penalty for failure in adhering to the delivery dates?

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In a Contract is there provision to deduct both Liquidated Damages and Penalty for failure in adhering to the delivery dates?

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A. The subject of Liquidated Damages is discussed in the Best Practices Procurement Manual (BPPM) section 8.2.3 Liquidated Damages. The BPPM is available online here. As noted in the BPPM, the courts will not enforce the liquidated damages provision if they construe them to be a penalty. Liquidated damages are intended to compensate the owner for real economic damages and not to be used as a penalty. It is likely that a court would consider the imposition of both liquidated damages and a penalty for late delivery to be punitive and thus unenforceable.

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