Liquidated and ascertained damages meaning

Even with advanced procurement techniques, scheduling tools and project management applications, construction schemes can still run late and overrun. Any slippage triggers extra cost. This Practice Note explores the delay damages regime designed to safeguard an employer if delay occurs, highlighting the relevant FIDIC clauses and other standard form contracts used in the energy sector that address delay damages. See also Practice Notes: Delay and disruption in construction projects and Time and money claims. The importance of time in energy projects Construction and energy contracts devote substantial attention to time, particularly setting a completion date. Most building contracts provide for delay damages (also termed liquidated damages or liquidated and ascertained damages (LADs)). The core concept is that, on specified breaches by the contractor—commonly failure to complete on time, but potentially performance shortfalls—agreed damages become payable to the employer. Fixing those sums before contract award seeks to avoid protracted and costly proceedings required to demonstrate actual loss...

This Practice Note sets out the concept of liquidated and ascertained damages (LADs/LDs) and their role within building contracts. It explains how these provisions function and why they are used. Distinguishes liquidated from general (unliquidated) damages; Reviews enforceability and common challenges, including penalty arguments; Addresses setting the LADs figure, caps, and the dangers of stating “nil” or “N/A”; Refers to case summaries in a related case law Practice Note. What are liquidated damages? Where parties to a construction contract agree LADs, they pre-determine a fixed sum payable if a specified breach occurs. These provisions are also known as liquidated and ascertained damages, with the acronyms “LDs” and “LADs” used interchangeably. When liability for LADs arises, the amount is usually payable by the contractor to the employer, or the employer may deduct it from sums otherwise due to the contractor...

Produced in association with 4 Pump Court The judiciary has consistently confirmed (see eg Ferson Contractors v Levolux) that the purpose underlying the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) is the prompt enforcement of adjudication outcomes; allowing parties to resist enforcement by advancing set‑off would cut across that purpose. Accordingly, where an adjudicator orders a payment, the paying party must discharge the sum in full, with no deduction or set‑off. Save in very limited circumstances, set out below, a separate contractual entitlement—such as a right to liquidated and ascertained damages (LADs)—cannot be relied upon to fend off enforcement of an adjudicator’s decision. Parties who attempt to set‑off against an adjudicator’s award therefore face a steep and difficult task...