Contributed By Allen Matkins Leck Gamble Mallory & Natsis LLP
There are many different methodologies used to allocate risk on a construction project, ranging from indemnifications and warranties to insurance requirements. Ordinarily, the contractor and the owner waive consequential damages.
There are limits to losses. If a contractor is late in completing a project, an owner cannot sue for lost profits. As with any claim for damages, the claimant must prove that damages have actually occurred, typically by preponderance of the evidence. It is typical to waive punitive damages.
Typically, there are no legal limitations on assigning risk to one party or another. Waivers of claims based on intentional tort are invalid as they are against public policy in the United States.