Liquidated Damages Flashcards
What are Liquidated Damages?
Genuine pre-assessment of the likely loss that
will flow from a breach of delayed completion
Do they apply to all procurement?
Yes
What are liquidated damages called in the NEC?
delay damages
What are the valid reasons for Liquidated Damages?
Missing the practical completion date
How are Liquidated Damages paid?
They are taken out of the bonds
When are Liquidated Damages applied?
After the Practical Completion Date
How can Liquidated Damages be prevented?
1) If found to be a penalty LAD clause will be void
2) Some LAD court cases have been refuted with
the reason being that they were penalties rather reimbursements
3) The amount of Liquidated Damages can be prevent if there is a maximum set in the Contract
How are Liquidated Damages calculated?
Rate of Liquidated Damages x Number of days
This is than be calculated in days,months,years.
Are Liquidated Damages a penalty?
No, it is a pre-determined reimbursement for the loss of potential profit of the client
What is a Penalty?
What is the difference between a penalty and reimbursement?
- LAD means genuine pre-estimate of likely lose whereas penalty is stipulated to frighten
- Penalty if sum involved is extravagant compared to greatest possible loss
- Penalty if it’s involved non-payment of money
- Penalty if only a single sum payable for occurrence of one or more of a particular events
- If it’s difficult to pre-estimate the likely lose any sum
stipulated will not be taking as a penalty
What does regularly and diligently mean?
“Proceed continuously, industriously, and efficiently with appropriate physical resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of works”.
What are the steps of the A/CA to gain Liquidated Damages?
Notice of Liquidated Damages
Withholding Notice
