Damaging agreement...

Any other damages that apply are said to be unliquidated and, subject to proof, have no specific limit. The advantage of including LDs for delays is that the parties know where they stand. However, sometimes the parties change the LD clauses, creating doubts as to what level of damages apply or even whether damages apply at all. This is what happened in Chattan Developments v Reigill.

Reigill was building 14 homes and associated site works for Chattan on a site at Chawden, Lancashire. The contract was based on JCT 1980 and the details were agreed at a meeting on July 10, 2002. Reigill’s letter of July 11, 2002, referred to the agreement, saying: ‘Liquidated and Ascertained Damages – N/A All Relevant Events and list of Matters to remain unaltered.’ 

The parties did not get round to agreeing a written contract.

There were delays and Chattan tried to claim £328,276 it had spent in additional interest charges as damages.

An arbitrator found for Reigill, deciding that the July 10 agreement meant the parties had agreed there would be no right to damages for late completion. Chattan appealed, arguing the arbitrator was wrong in law.

The court disagreed with Chattan and upheld the arbitrator’s award, but noted that if a written contract had been concluded then Chattan’s argument would have been more powerful.

Moral: If the agreement is ambiguous others will decide its meaning.

Case: Chattan Developments v Reigill Civil Engineering Contractors Ltd. (TCC February 2007)