If a project has liquidated damages of $500 per day and is completed 15 days late, what amount can the owner deduct from the final payment?
Correct Answer
B) $7,500
Liquidated damages calculation: $500 per day × 15 days late = $7,500 that can be deducted from the contractor's final payment.
Why This Is the Correct Answer
Liquidated damages are predetermined amounts specified in the contract that the contractor must pay for each day the project is completed late. The calculation is straightforward multiplication: the daily rate multiplied by the number of late days. In this case, $500 per day × 15 days = $7,500. This amount represents the owner's compensation for damages caused by the delay and can be legally deducted from the contractor's final payment.
Why the Other Options Are Wrong
Option A: $6,500
$6,500 would result from multiplying $500 × 13 days, which uses the wrong number of late days
Option C: $8,000
$8,000 would result from multiplying $500 × 16 days, which overstates the delay period by one day
Option D: $7,000
$7,000 would result from multiplying $500 × 14 days, which is one day short of the actual 15-day delay
Memory Technique
Remember 'LID' - Liquidated damages = Late days × Initial daily rate. The formula is always: Daily Rate × Number of Late Days = Total Deduction
Reference Hint
Look up 'Liquidated Damages' in the contract law section or Chapter 713 Florida Statutes regarding construction liens and contract remedies
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