DAVE GUSTAFSON & CO. V. STATE
156 N.W.2d 185 (1968)
NATURE OF THE CASE: Gustafson (P) appealed a decision which ruled that a provision in a
state highway construction contract with State (D) was a liquidated damages clause and not
an illegal penalty.
FACTS: P entered into a contract with D construct and surface a new public highway. P
agreed to do the work for $530,724.14. P failed to complete the new highway on the date
fixed and was late by 67 working days. D withheld $14,070.00 as liquidated damages from the
amount due P computed according to the contract scale of daily damage for delay in
construction. The per diem daily damage was $210. The contract deemed time an essential
element of the contract and it was stipulated that delays would cost D monies to include
engineering, inspection, and supervision. P sued D for withholding the monies. The trial
court agreed with D and P appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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