Southwest Engineering Co. v. United States
United States Court of Appeals, Eighth Circuit
341 F.2d 998 (1965)
The federal government (defendant) withheld $8,300 in liquidated damages from Southwest Engineering (plaintiff) after Southwest completed four construction contracts late, even though the government stipulated it suffered no actual damages from the delays and had already granted appropriate extensions for delays outside Southwest's control; Southwest sued to recover the withheld amount, arguing the government wasn't entitled to liquidated damages absent any actual harm, but the trial court found the liquidated damages provisions reasonable and enforceable and dismissed Southwest's claims.
Whether, when parties at the time of contract formation have agreed upon a liquidated damages provision as a reasonable forecast of just compensation for breach, and damages are difficult to estimate accurately, the liquidated damages provision should be enforced.