Damages

Question 1

What is the general principle of damages?

Answer 1

Intended to put the innocent party back in the position they were in before the breach.

Question 2

Name some situations when a client has a right to make a claim for damages against the contractor?

Answer 2

• incomplete work
• breach of contract
• defective work
• failing to comply with architects instructions

Question 3

Name some situations when a main contractor has a right to make a claim for damages against the client?

Answer 3

• actual loss that has been suffered

- any profit of which the MC has been deprived

Question 4

What are liquidated damages? What does the employer have to do to levy liquidated damages?

Answer 4

LD - payment for when contractor has failed to achieve practical completion by the completion date set out in the contract.

To levy:

• issue a non-compliance notice
• issue first notice
• issue second notice - pay less notice is issued

Question 5

What is the difference between liquidated and unliquidated damages?

Answer 5

Liquidated - pre-agreed amounts of money that is set out in the contract
Unliquidated - exact amount has not been pre-agreed. Said to be ‘at large’ and is determined after the breach has occurred.

Question 6

What are the advantages and disadvantages of LADS?

Answer 6

Liquidated and ascertained damages.
Adv:
-finance for every week of the delay
-save time and money on arbitration
Disadv:
-Claim can only be made where there is a provision for it in the contract
-Can be seen to be harsh in that amount to be paid is made greater than the loss

Question 7

What happens if ‘nil’ is inserted in the contract particulars as the rate for liquidated damages?

Answer 7

It will exclude liquidated damages from the contract. It could also imply that the loss for unliquidated damages is also nil. Therefore, they should make clear that unliquidated damages apply or delete clause for liquidated damages.

Question 8

What happens if ‘nil’ is inserted in the contract particulars as the rate for liquidated damages?

Answer 8

It will exclude liquidated damages from the contract. It could also imply that the loss for unliquidated damages is also nil. Therefore, they should make clear that unliquidated damages apply or delete clause for liquidated damages.

Question 9

As a contractor what factors would you consider when deciding whether to claim for damages/EOT through the contract or through common law?

Answer 9

Damages can only be recovered through contact law if the breach of contract is proven.