We have all heard the saying that an ounce of prevention is worth a pound of cure. This holds true for litigation arising from construction projects where it is much easier and cheaper to avoid a large judgment through careful contract drafting on the front end. One important tool for doing so is a limitation of liability provision which is commonly found in construction contracts.
The South Carolina Supreme Court recently held in Maybank v. BB&T Corporation, that such provisions can extend to prohibiting an award of punitive damages. The potential for a punitive damages award in an amount many times a plaintiff’s actual damages is a serious concern for construction professionals, and the ability to contractually eliminate that risk is of great value. However, as Maybank makes clear, a limitation of liability provision must be carefully drafted to provide the greatest likelihood that a court will enforce the provision.