Southwest Engineering Co. v. United States
United States Court of Appeals, Eighth Circuit
341 F.2d 998 (1965)
The United States Government (government) (defendant) hired Southwest Engineering Co. (Southwest) (plaintiff) to perform four substantial construction contracts. Each contract contained a liquidated damages provision stating the amount of damages that would accrue each day the projects were late. The liquidated damages provisions also provided for excusing delays or extending performance in the event of delays by the government or other occurrences beyond the control of Southwest. Southwest was late completing all four projects due to reasons both within and outside of its control. After adjusting for other factors and granting appropriate extensions, the government withheld a total of $8,300 in liquidated damages from Southwest’s pay. The government stipulated that it suffered no actual damages from Southwest’s delay, but acted according to the liquidated damages provisions in each contract. Southwest brought suit against in federal district court against the government seeking recovery of the liquidated damages. Southwest argued the government was not entitled to liquidated damages because it suffered no actual damage. The trial court held the liquidated damages clauses to be reasonable and enforceable, and dismissed Southwest’s claims. Southwest appealed.
Rule of Law
Holding and Reasoning (Van Oosterhout, J.)