Penalty Clause for late delivery

What is the purpose of the penalty? Monetary Penalties are usually held to be unenforcable unless you also provide for an early completion/delivery bonus. Is it your intent to reward the contractor for early delivery? LDs are not supposed to be a penalty

Thank you sir for this feedback! It is very helpful. We are trying to structure based on delivery performance.

Thanks again.

No problem. Oh by the way, if you are a contractor writing a subcontract, I think I remember seeing such cases 35 years ago in state courts before coming to work for the Feds

Late delivery might be a breach of contract. (Then again, it might be an excusable delay.) If the late delivery is a breach of contract, then the "penalty" is breach of contract compensatory damages. Are you a contracts person? If so, do you know anything about that?

Upon checking previous threads, jph is probably still working for a contractor. jph, if you are trying to structure a subcontract to protect your firm in the event of late delivery by a sub or supplier, I suggest contacting a lawyer who is familiar with your state's law concerning breach of contract. For instance, check out this generic discussion of redemies for breach of contract:

http://law.freeadvice.com/general_practice/contract_law/remedies_breach.htm#ixzz3MU8ANDy8

You need to know the specific law for the state controlling for your subcontract. Note that if you want to be able to recover legal costs associated with recovery, the article says that this needs to be cited in the contract.

You didnt reply to my question asking if you intend to reward (incentivize) your (sub/supplier) for early performance/delivery/completion. So, I will assume that is a "no", that there is no particular benefit to your firm if delivery is early.

Then, I doubt if you can "penalize" the sub/supplier for late delivery. You could establish liquidated damages, based upon the reasonable estimation of delay costs that can be anticipated, which might prevent you from recovering actual damages for being late. Otherwise, you'd want to use language that allows you to recover the types of costs discussed in the article.

It looks like you will want to be able to collect damages for late delivery or other lack of performance that might impact your performance and/ior costs as a prime. According to the article, you "generally cannot collect punitive damages in contract cases", unless the conduct is egregious and intentional. Then recovery of such damages may well require some litigation.

My advice, use a lawyer to help you write the contract language - don't rely on generic answers here to your very vague scenario.

I found the above link using a Yahoo Search under "breach of contract - damages?"

Forget penalties for late delivery! See Restatement of the Law, Second, Contracts 2d, § 355, "Punitive Damages":

Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.