My understanding of your question is that you are setting the LADs for the Employer to go into the Contract.
If so they must be a genuine ascertainment of the damage and or loss that will be suffered if the project is delivered late.
You must take into account:
Loss of income.
Rent on existing premises.
Finance Charges.
Standing Staff.
Consultancy Fees.
Insurances.
Currency Fluctuations.
If the LADs are set too high the Contractor will build in a contingency in his tender.
If there are no LADs then the damages are "At Large" and therefore limitless and few switched on Contractors will tender.
In most contracts the extension of time clause is set down to protect the Clients right to deduct LADs because he cannot penalise a contractor for his own defaults.
Best regards
Mike Testro
Member for
18 years 2 months
Member for18 years2 months
Submitted by James Barnes on Thu, 2008-04-10 08:56
erm, right. My understanding (from the last time I was threatened with LDs)
Liquidated damages are codified into the contract to make the claiming (and in somecases limitation) of damages easier to assess. Often they expressly replace Ascertained damages.
The most common formula I have seen is that LDs will be payable at a rate of $xxx (or yyy% of the contract sum) per day of delay to the contract completion upto a value not exceeding zzz% of the total contract value.
It will be codified in the contract. If its not there, then there are no LDs nominated and they cant be claimed, the claimant would need to demonstrate ascertained damages (loss of rent etc) and probably go to court to get them.
Member for
19 years 10 monthsRE: Liquidated Damages
Hi Faried
My understanding of your question is that you are setting the LADs for the Employer to go into the Contract.
If so they must be a genuine ascertainment of the damage and or loss that will be suffered if the project is delivered late.
You must take into account:
Loss of income.
Rent on existing premises.
Finance Charges.
Standing Staff.
Consultancy Fees.
Insurances.
Currency Fluctuations.
If the LADs are set too high the Contractor will build in a contingency in his tender.
If there are no LADs then the damages are "At Large" and therefore limitless and few switched on Contractors will tender.
In most contracts the extension of time clause is set down to protect the Clients right to deduct LADs because he cannot penalise a contractor for his own defaults.
Best regards
Mike Testro
Member for
18 years 2 monthsRE: Liquidated Damages
erm, right. My understanding (from the last time I was threatened with LDs)
Liquidated damages are codified into the contract to make the claiming (and in somecases limitation) of damages easier to assess. Often they expressly replace Ascertained damages.
The most common formula I have seen is that LDs will be payable at a rate of $xxx (or yyy% of the contract sum) per day of delay to the contract completion upto a value not exceeding zzz% of the total contract value.
It will be codified in the contract. If its not there, then there are no LDs nominated and they cant be claimed, the claimant would need to demonstrate ascertained damages (loss of rent etc) and probably go to court to get them.