Essential law: Liquidated damages, part two

By James Worthington and Carolyn Davies 2021-02-22T05:00:00

Continuing our series on the basics of construction law, Andrew Keeley looks at the consequences of a liquidated damages clause being unenforceable

Parties often agree to predetermine the level of damages that an employer is entitled to claim in the event of late completion. This benefits the employer, by avoiding the need to prove the actual losses it has suffered as a result of the delay. It can also benefit the contractor, whose liability for late completion is limited to the agreed rate of damages (known as liquidated and ascertained damages or LADs).

LADs clause struck down

If a court decides that a LADs clause is unenforceable for some reason, the clause will be struck down and the employer will not be entitled to automatically recover the agreed level of damages.

Already registered? Login here

To continue enjoying Building.co.uk, sign up for free guest access

Existing subscriber? LOGIN

Stay at the forefront of thought leadership with news and analysis from award-winning journalists. Enjoy company features, CEO interviews, architectural reviews, technical project know-how and the latest innovations.

Limited access to building.co.uk
Breaking industry news as it happens
Breaking, daily and weekly e-newsletters

Get your free guest access SIGN UP TODAY

Subscribe now for unlimited access

Subscribe to Building today and you will benefit from:

Unlimited access to all stories including expert analysis and comment from industry leaders
Our league tables, cost models and economics data
Our online archive of over 10,000 articles
Building magazine digital editions
Building magazine print editions
Printed/digital supplements

Subscribe now for unlimited access.

View our subscription options and join our community