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Liquidated and ascertained damages (LADs or LDs) meaning
Published by a LexisNexis Construction expert
What does Liquidated and ascertained damages (LADs or LDs) mean?
Liquidated and ascertained damages (LADs or LDs) are a pre-agreed sum payable by the contractor to the employer on a specified breach of contract—most commonly delay to completion of the works. Delay LADs are usually a fixed rate per day or week running from the contractual date for completion. Other common applications include performance LADs and target internal area LADs in development agreements. The term is a descriptive expression widely used in construction contracts (e.g. JCT, NEC, FIDIC), not a statutory definition.
LADs aim to quantify loss in advance so the employer can recover without proving actual damage. Enforceability depends on the penalty rule. In England & Wales and Northern Ireland, following Cavendish/ParkingEye, LADs are enforceable if they protect a legitimate interest and the level is proportionate; a penal provision is unenforceable. In Scotland, a similar penalty doctrine applies and courts have treated the Cavendish approach as persuasive. In Ireland, the courts generally apply the Dunlop principles, assessing whether the sum is a genuine pre-estimate of loss or extravagant; Cavendish is persuasive but not determinative.
Typical drafting addresses the trigger, the daily/weekly rate, any cap, concurrent delay, and whether LADs are an exclusive remedy.
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View the related Practice Notes about Liquidated and ascertained damages (LADs or LDs)
PRACTICE NOTES
Liquidated damages in construction: drafting and enforcement—penalties post-Makdessi, uncertainty, prevention, procedures, capping, sectional completion/partial possession, sub-contracts, and JCT/NEC/FIDIC guidance
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...
21 May
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PRACTICE NOTES
Construction law glossary—L: LADs, latent defects, letters of intent, loss and expense, lump sum contracts, LDEDCA and related terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z LADs Refer to Liquidated and ascertained damages (LADs or LDs). Late Payment of Commercial Debts (Interest) Act 1999 The Late Payment of Commercial Debts (Interest) Act 1999 grants a statutory right to recover interest on overdue sums. See Practice Notes: Remedies for non-payment under construction contracts and Late Payment of Commercial Debts (Interest) Act 1998. Latent defects Flaws inherent in a property’s design or construction that are not evident upon inspection. See Practice Note: Latent defects. Latent defects insurance Cover that insures against damage to a property arising from latent defects which emerge during the policy term. Such insurance typically runs for 10 or 12 years from practical completion and is arranged on payment of a single premium...
21 May
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