Opinion ID: 2592878
Heading Depth: 1
Heading Rank: 5

Heading: Is the $850 per diem reasonable for delays in final completion?

Text: Next, Carrothers argues the contract's liquidated damages clause is unreasonable as a matter of law because the $850 per diem amount that is applicable to delays in achieving final completion is the same for delays in achieving substantial completion. In support of its contention, Carrothers cites DeWerff, 6 Kan.App.2d at 80, 626 P.2d 1206 (A lack of calculation as to actual damages is assumed when the stipulated damages amount is the same for a total or partial breach or for minor or major contract provisions.), and Oriental Gardens, 32 Kan.App.2d at 562, 86 P.3d 543 (An accelerated rent provision was unenforceable because it applied to all breaches of contract, however major or minor, and it had no reasonable relationship to actual injury.). But as discussed above, Carrothers' argument applies the wrong legal test to these facts. Here, the contract language clearly expressed the parties' intent that liquidated damages continue past substantial completion and delegated to the project engineer the task of determining when final payment was authorized. Further, the project engineer testified the damages incurred for a delay in substantial completion compared on a prospective basis at the time of contracting with the damages for a delay in final completion. Indeed, he testified there was really no difference in the risk to the City between a late substantial completion date and a final completion date. Whether it was reasonable to use the same $850 per diem amount for delays in final completion as was being used for substantial completion is to be determined using the prospective analysis, discussed above, based on the conditions of the parties when the contract was formed. Accordingly, it is not relevant that the final completion delay damages, which amounted to a single day's assessment of $850, resulted from Carrother's failure to simply deliver the operating manuals. The test for this contractual provision's reasonableness is whether: (1) at the time of contracting it would appear conscionable to assess $850 per day in liquidated damages for the period of time between substantial and final completion in view of the value of the contract and the probable or presumptive loss in case of a breach; and (2) actual damages for that time period would be difficult to calculate. In reviewing the summary judgment record, the district court noted that had the City's old treatment facility failed prior to final completion, the danger posed to citizenry would have been incalculable. Given the public service nature of this project, the parties' clear intent to make liquidated damages applicable to this particular time period, and the project engineer's evaluation of the parties' relative risks when viewed at the time of contracting, we agree with the Court of Appeals and the district court that the $850 per diem assessment for the 1-day delay in achieving final completion was reasonable under the circumstances.