Florida construction contracts form the backbone of every project, laying out the terms and expectations that guide the work from start to finish. These agreements are critical to ensuring the smooth operation of a project and protecting the interests of all parties involved.
Before shovels break ground, it’s important to consider every clause in the contract, including potential provisions and exceptions regarding consequential damages. Sometimes referred to as special damages, consequential damages can have significant financial implications. While they are occasionally waived during negotiations, their inclusion or exclusion must align with the project’s unique needs.
What Are Consequential Damages in Florida Construction Projects?
Consequential damages refer to financial losses that occur indirectly due to another party failing to meet their obligations. In construction, these damages often arise when a party’s breach of contract causes ripple effects beyond the immediate scope of the breach. For example, if a contractor delays work on a project, the property owner may suffer additional losses unrelated to the actual construction.
Common examples include loss of use, such as when a property remains unusable due to incomplete work, or increased material costs caused by a supplier’s failure to deliver on time. Extended equipment rental fees can also fall under consequential damages if delays require the owner or contractor to keep rented machinery for longer than anticipated. These damages must be reasonably linked to the breach to be valid under Florida law. Understanding how they apply to your project can help you determine whether their waiver is appropriate.
When It Makes Sense to Waive Consequential Damages
Waiving consequential damages in a construction contract may be a useful negotiation tool and decision for certain projects. Contractors often seek this waiver to limit their liability and ensure their financial exposure doesn’t exceed what’s directly tied to the project. Similarly, property owners may agree to such waivers to expedite contract negotiations and avoid potential construction litigation down the line. A mutual waiver ensures both sides share equal protection, fostering a fairer agreement overall.
When You Shouldn’t Waive Consequential Damages
There are situations where waiving consequential damages could leave a party vulnerable, however. Property owners, for example, may hesitate to waive these damages if delays or failures by the contractor could cause significant indirect losses. Contractors should also proceed cautiously if the waiver is not mutual, as this could leave them exposed to claims without reciprocal protection—meaning they could end up losing money on a project. Construction work where it’s hard to determine the exact materials needed or exact timelines related to the project and supply chain matters may still need these damages included in the contract.
Without a waiver, these could result in litigation or necessitate alternative dispute resolution in the future.
Florida Construction Contract Drafting and Support
Every construction project is unique, and so are the contracts tied to them. Thoughtfully addressing consequential damages in your agreement can help prevent disputes and protect your financial interests.Florida Construction Law Group offers experienced guidance for drafting, negotiating, and reviewing contracts to ensure they align with your needs. Whether you’re a contractor, property owner, or supplier in Florida, we’re here to help you navigate the process and protect your project. Contact our law firm to discuss your contract concerns and learn how we can support your construction goals.
