Essential law: Liquidated damages, part three

By Chris Busaileh 2021-05-27T05:00:00

Continuing our series on the basics of construction law, Chris Busaileh considers some of the issues with including liquidated damages clauses in subcontracts

Construction contracts commonly use liquidated and ascertained damages (LADs) clauses to set a predetermined rate of damages to be paid on the occurrence of certain breaches, most commonly delay. The commercial rationale is clear: LADs promote certainty and avoid the need for the innocent party to establish its actual losses as a result of the delay (which can often be costly and protracted).

There are a number of specific issues that need to be considered for a main contractor looking to include LADs clauses in subcontracts.

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