WK9AM - Damages

Question 1

Q1. What is the general principle of damages?

Answer 1

Damages is a financial remedy which aims to compensate the injured party for the consequence of a breach in contract.
Cannot be too remote.

Question 2

Q2. Name some situations when a client has a right to make a claim for damages against the contractor.

Answer 2

• Defective Work
• Failure to comply with AI
• Delay

Question 3

Q3. 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
• Not being paid for work
• MC disrupted by Emp

Question 4

Q4. What are liquidated damages? What does the employer have to do to levy liquidated damages?

Answer 4

Liquidated damages are pre-determined damages set at the time the contract was entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date.
E.g. Rent on temporary accommodation, removal costs, extra running costs etc.

• That there has been a breach of contract;
• that it has suffered loss;
• that there is a causal connection between the breach and the losses that party wants to recover.

Question 5

Q5. What is the difference between liquidated and unliquidated damages?

Answer 5

Liquidated are prespecified amounts in the contract.

Unliquidated means it will have to go through the courts to be claimed/calculated.

Question 6

Q6. What are the advantages and disadvantages of LADS?

Answer 6

Advantages of a liquidated damages - no need to prove the actual loss since the clause provides a pre-estimation of the damages to be paid. In addition to helping recover damages, this helps to provide certainty to the parties.
Advantage of unliquidated damages is that it allows for recovery of losses which may have been impossible to foresee or to estimate with any certainty before the breach.

Question 7

Q7. If the amount of LADs is too low can the Employer decide to refuse to collect LADs and claim unliquidated damages?

Answer 7

If the contract contains an applicable liquidated damages clause, the client is generally not permitted to disregard and claim unliquidated damages instead.

Question 8

Q8. What happens if “NIL” is inserted in the Contract particulars as the rate for liquidated damages?

Answer 8

Means the parties do not wish to claim liquidated damages, however this does not mean they cannot apply for unliquidated damages.

Question 9

Q9. 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

Who’s the claimant and defendant?

• Claim under contract – CA will settle
• JCT16 – CA does not have the right to deal with damages for breach of employer
• Interim payment
• Notices

Question 10

Q10.If the MC carries out defective work what is the basis of calculation that the Employer will receive as damages.

Answer 10

• Cost of repair
• Date backdated to?
• Dodd Properties v Canterbury City Council (1980)
• Diminution in value
• Loss of amenity value - see Ruxley v Forsyth (1995)
• Physical discomfort and emotional frustration?

Question 11

Q12. What is a global claim?

Answer 11

contractors may make a ‘global claim’ by rolling together a number of different breaches and making a case for a cumulative effect resulting in a single total cost without attributing actual costs to specific events.
Global claims have not always found favour with the courts, as they can ignore other reasons for the delay or disruption, and they place the burden of proof on the employer to carry out a detailed assessment of the claim and how it has been constituted.

Question 12

Q13. What types of claims do we have in construction?

Answer 12

• Claims for EOT – Relevant matters
• Claims for design changes
• Contract termination
• Defective of Deficient work documents
• Bond claims
• Construction defects
• Construction delay
• Personal injury
• Failure to disclose

Question 13

Q14. How does a MC claim for additional costs incurred under JCT for suspension due to non-payment?

Answer 13

Claim as a relevant matter
1) Written Notice to the CA, 2) As soon as the relevant matter became apparent that it would cause a delay, 3) providing details of L&E with notice, 4) CA will then ask MC for information to enable an opinion to be formed, 5) Must prove delay was a material effect and delay was caused by deferred possession or relevant matters.