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Ohio Supreme Court Liquidated Damages Analysis: Hindsight is not 2020!

In a case decided on February 24, 2016, the Ohio Supreme Court construed the enforceability of a liquidated damages provision in a public works construction contract. The Court held that when evaluating the enforceability of a liquidated damages provision in a construction contract, the court must conduct its analysis prospectively, based on the per diem amount of the liquidated damages at the time the contract is executed, and not retrospectively, based on the total amount of liquidated damages that ultimately accrue.

In reversing the Court of Appeals, the Ohio Supreme Court determined that the mere fact that the liquidated damages totaled $277,900 (calculated at $700 per day times 397 days late) did not result in a finding that the amount of liquidated damages was unreasonable where the base contract amount was $683,300. The flaw in the Court of Appeals reasoning was that it applied a retrospective analysis using hindsight. The long-standing test in Ohio requires the analysis to be considered at the time the parties entered into the contract.

The Ohio Supreme Court also held that “liquidated damages are not deemed a penalty simply because a project consists of new construction of an improvement that did not exist previously and no proof of damages is required to enforce liquidated damages pursuant to such a contract.”

This decision also includes an interesting overview of the Samson Sales tripartite test for distinguishing between an unenforceable penalty clause and a valid liquidated damages clause.

To read the Slip Op. No. 2016-Ohio-628, Boone Coleman Constr., Inc., v. Piketon, visit: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2016/2016-Ohio-628.pdf

Should you wish to consult with the author of this article, please feel free to contact Attorney Robert A. Hager at (330) 253–4925.

Amanda Waesch Weighs in on Leasing v. Buying Medical Office Space

Amanda Waesch weighs in on leasing v. buying medical office space

BMD's 2018 Florida Rising Stars

BRENNAN, MANNA & DIAMOND is proud to announce ALESSANDRO A. APOLITO, MATTHEW T. JACKSON and JOSHUA R. La BOUEF, have been selected as 2018 Florida Rising Stars for Business Litigation.

How bringing baseball to Akron launched a career of dealmaking

Baseball changed Tony Manna’s life. More specifically, bringing minor league baseball — and a new stadium — to Akron. “When I completed that deal, I remember a guy told me, ‘Your whole life is going to change because of this deal and the notoriety that comes with it,’” recalls the CEO of real estate developer Signet LLC. “He was absolutely right about that.” In this week’s Master Dealmaker, Tony shares his approach to dealmaking, the team he’s built and how pillow talk can play in the success or failure of a business deal.

Social Enterprises Show Us that Business with a Purpose is Possible

On Feb. 17, the Young Lawyers Section of The Jacksonville Bar Association held its Ninth Annual Young Lawyers Section Chili Cook-Off at the Riverside Arts Market, which benefited Rethreaded, a local nonprofit.

BMD's Daphne Kackloudis Drafting Legislation Seeking Additional Funding for Children Born Addicted to Opioids

BMD's Daphne Kackloudis has been working with her client, Brigid's Path, to help them gain access to additional federal funds for their mission. She has drafted legislation which would do just that. The CRIB Act would amend the Social Security Act to allow Medicaid reimbursement for residential pediatric recovery centers such as Brigid's Path. Congressman Turner is going to ask Sen. Portman to amend his opioid bill (CARA 2.0) to include the CRIB Act.