FEDERALCourt of Appeals for the Tenth Circuit
2007

Hutton Contracting Co. v. City of Coffeyville

487 F.3d 772Court of Appeals for the Tenth Circuit • Decided 2007Enforced

HOLDING

Hutton Contracting built power and fiber-optic lines for the City of Coffeyville but faced delays partly caused by its supplier's late pole deliveries. The court ruled that contractors cannot use force-majeure clauses to escape responsibility for supplier delays, and that liquidated damages clauses are enforceable if they were reasonable when the contract was signed. Hutton lost $85,500 in liquidated damages even though actual damages may have differed. This matters to subcontractors because you remain liable for your suppliers' performance, and penalty clauses in your contracts will likely be enforced.

KEY FINDINGS

Force Majeure

You are responsible for your suppliers' delays—force-majeure clauses typically won't protect you from supplier performance failures

Liquidated Damages

Liquidated damages provisions are enforceable if they were reasonable at contract signing, regardless of whether actual damages end up being higher or lower

Flow-Down

Make sure your subcontracts flow down liability for supplier delays to your suppliers, or you'll absorb the cost yourself

FULL COURT OPINION