Level 3 - Liquidated Damages Flashcards
How are liquidated damages taken by the Client?
Non completion Notice is issued by the Employers Agent
Client informs the Contractor of their intention to deduct LDs
What did you advise your Client regarding the Contractual mechanisms which deduct liquid dated damages?
I advised the Client that the contractor was in breach of contract by not finishing the works and LDs could be deducted.
To do this the EA had to submit a Non Completion Notice and the Client had to inform the Contractor of their intent to levy damages.
Liquidated Damaged could then be deducted through a payless notice issued by the Client.
What are Liquidated Damages?
A genuine Pre estimate of loss the Client would incur as a result of the project completing late
What is a Payless Notice?
Allows the Client to deduct money from the Contractor following issue of the Payment Notice.
Has to be done 5 days before the final date for payment
When are LDs enforceable?
The day after the completion date in the Contract
Would you include the deduction of LDs in your Final Account?
No, the employer deducts this and its shown in their overall project cost
What are Unliquidated Damages?
If LDs are left blank, the client is able to claim unliquidated damages by proving the actual loss incurred.
This can be lengthy process and be subjective
Who would calculate LDs?
The client and their team calculate LDs not me as a QS
On Devonshire Row, the client asked me to advise on LDs, I advised on what is typically included in Liquidated damages but not the Cost.
What is typically included in the rate / cost for Liquidated Damages?
Loss of Rent
Lost of income / revenue
Fees
Storage Costs
What needs to be in place for LD’s to be deducted?
- Non Completion Notice
* Intention of client to deduct LD’s
For LD’s, what is the difference between “per week” and “per week or part thereof”?
- “per week” = if contractor was late by 1 day then only 1-day LD’s can be deducted
- “per week or part thereof” = if contractor was late by 1 day then whole week LD’s can be deducted
What would you do if the client couldn’t deduct LD’s off a payment certificate?
- Contractor would owe employer monies = would be a debt
Would you include the deduction of LD’s in a final account?
- No, the employer deducts this and it’s shown in their overall project costs
