Southwest Engineering v. United States

• 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

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

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.)

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

Affirmed

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.