Evening star., 1901-04-23
SHOULD DEDUCT AMOUNT
FORFEITURE ON SCHOOL. PLUMBING
CONTRACTS.
Decision of the Controller of the
Treasury on the Subject-Reeard-
ed as Liquidated Damages.

treasury, has rendered a decision upon the
following letter sent him by the District
Commissioners:
"Messrs. John ]. Nolan and Walter D.
Nolan. trading under the firm name of
James Nolan Sons, made an agreement
with the District of Columbia June %,
lSo0 under contract No. 2775, to repair
and change the plumbing in the Grant
School building for the sum of $3,525.
The contract aforesaid contains the fol-
lowing provision:
Time-The work shall be commenced
within one week after the award of the
contract. and the entire work shall be
finished in seventy-five days thereafter, or
forfeiture of S per day will be charged
against the contractor for each and every
day the work Is delayed beyond the day
set for it's completion
Other contracts. with similar provisions
were also made with the same firm as fol-
lows:
Gales building contract No. 2s44 Au-
gust Ii. 1900, and Garnet building, con-
tract No. 1855. August q. 1900.
THE contractors failed to complete the
work within the time specified, exceeding
the limit twenty-one days at the Grant
building; forty-eight days at the Gales
building and fifty-six days at the Garnet
building, making total Of 105 days beyond
contract time and an aggregate of S625 in
forfeitureS at the rate of s. per day.
THE contractors contend that the for
FIXTURES should not be charged against
them. quoting in support of their conten-
Mitchell, under date Of September 10. 1900,
in the case Of the NJ. A. Sweeney Ship
yard and Foundry Company for the con-
struction Of a boat.
In order that the matter may be deter
mined, have the honor to recommend that
this communication, together with the let
ters herewith of the contractors and of
the superintendent of plumbing, respec-
lively, which set out the facts in the case,
be referred to the controller of the treas
ury for his opinion upon the question at
ISSUE
Mr.. Tracewelrs decision is as follows:
THE only question presented is whether
the contract provides for liQuidated dam
ages or for a penalty under which only the
actual and ascertafned damages arising on
breach Of the condition in regard to the
completion Of the work within the time
agreed upon can be collected.
'"The amount stipulated for doing this
whole work at the Grant School building is
$3,525.
THE contract provides: Work shall be
commenced under this contract within one
% week after award of contract, and the
entire work shall be completed within
seventy-five 90 days thereafter
THE specifications which have been made
part of the contract provide: "rime-The
work shall be commenced within one week
after the award of the contract, and the
entire work shall be finished in seventy-five
days thereafter, or a forfeiture of five dol
lars go per day will be charged against
the contractor for each and every day the
work is delayed beyond the day set for it's
completion
1T is shown by the papers submitted and
from information obtained from the in
spector of plumbing that the failure to
complete this work within the time agreed
upon occasioned much annoyance and in
convenience to the school employees and
children. as well some loss Of time be-
cause of their having to utilize toilet rooms
in another building.
Computation of Damages.
"The actual damage arising in this case
is impossible Of exact ascertainment, and
this, no doubt, was the reason for the stip-
ulatton as to the amount of said damages
before hand.
1.-THE provisions which require the con-
tractor to begin work within one week
from the award Of the contract, and to
finish the entire work in seventy-five days,
and the further provision that a failure to
commence work at the time specified or
to prosecute it in satisfactory manner
shall be the authority for the Commits
sioners to suspend the contractors from
the work, all show that time was regarded
by both parties as Of the essence Of this
contract, and that failure to complete the
work in the specified time is a good and
sufficient consideration for the forfeiture
Lowden 11 Ohio. $40. 36D.
Whether the forfeiture provided for In
the contract Is to be construed as a pen
atty or as liquidated damages depends not
alone upon the actual words used but
upon the intent of the parties, which must
be gathered from the words as applied to
the subject matter Of the contract and
the circumstances surrounding the parties
when it was entered into. See Comp.
Dec, 2s2, and authorities therein cited,
& Comp Dec, 217)
another rule is that where the for
feiture provided for in the contract is for
doing or omitting to do one thing by a
specified time, and the damages arising
from such failure are difficult OF incapable
of ascertainment, such forfeiture will gen.
orally be regarded as providing for liqui-
dated damages II the sum named Is rea-
sonable and is commensurate with the ac-
tual damages suffered. 6 Comp. Dec,
1922
Regarded as Liqufdated Damages.
'In view Of all the circumstances sur
rounding this matter. am Of the opinion
that this forfeiture provided for in this
contract should be regarded as liduidated
damages, because:
"First-The actual damages by reason of
the failure to complete the contract in
the specified time are incapable Of ascer-
tainment by any known rule of estimating
damages.
SecOnd-Ine sum named Is reasonable
when considered in connection with the
cost of the work to be done and the time
agreed upon for completion.
"Third-The forfeiture provided Is for
failure to do but one thing, and is the only
forfeiture provided for in the contract.
"Fourth-The amount forfeited is gradu-
ated by the length Of time the completion
of the work is delayed
Fifth. The whole contract shows that
this forfeiture was intended to be the cer-
tain and only measure of damages for the
delay, and was agreed upon by the parties
to take the place Of any other method of
computing said damages, which at best
could be but little short Of speculative.
'"The reasons given for the delay as
shown by the contractors are not material,
as said delay does not appear to have been
occasioned by anything that was done or
omitted to be done by the District Com
missioners (6 Comp. Dec, TAB, 1907
There Is but one contract before me, but
I assume for the purposes of this decision
that all the contracts are alike and that
the same rule will apply to each. In max
ing settlement with the contractors the
amount forfeited should therefore be de-
Quoted from the contract price as nqui-
dated damages"