DJ Manufacturing Corp. v. United States
United States Court of Appeals for the Federal Circuit
86 F.3d 1130 (1996)
DJ's (plaintiff's) contract to supply combat field packs to troops in Operation Desert Storm included a liquidated-damages clause assessing one-fifteenth of 1 percent of the contract price per day of delayed delivery, and after DJ missed several deadlines, the government withheld roughly $663,000 (about 8 percent of the contract price); DJ sued to recover the withheld amount, arguing the clause was an unenforceable penalty because it was designed to spur timely performance and used a standard rate rather than one tailored specifically to this contract.
Whether a liquidated damages clause will be enforced if contract damages are difficult to measure, unless the amount specified is extravagant or disproportionate to the amount of loss.