Hutton Contracting Co. v. City of Coffeyville
487 F.3d 772 | Court of Appeals for the Tenth Circuit | 2007
What This Case Means for Subcontractors
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 Takeaways
- •You are responsible for your suppliers' delays—force-majeure clauses typically won't protect you from supplier performance failures
- •Liquidated damages provisions are enforceable if they were reasonable at contract signing, regardless of whether actual damages end up being higher or lower
- •Make sure your subcontracts flow down liability for supplier delays to your suppliers, or you'll absorb the cost yourself
- •Review liquidated damages amounts carefully before signing—courts will enforce them even if they don't match real damages
A contractor is responsible for the unexcused performance failures of its subcontractor.
Frequently Asked Question
Can I use a force-majeure clause to avoid paying damages if my supplier is late?
No. Courts have ruled that contractors remain responsible for supplier delays even when a force-majeure clause exists. You cannot pass the blame to your supplier to escape liability to your customer. Instead, flow down the delay responsibility to your suppliers in your subcontracts so they bear the cost.
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