For this reason, construction contracts will include a fixed completion date which may be extended through extension of time provisions. From a contractor's perspective: In complex construction contract disputes there can be many losses and breaches of contract which can make it extremely difficult to link a specified loss to a specified breach.The benefit of a valid LDs clause from the employer's perspective is that it removes the need for the employer to prove its actual loss and to 'mitigate', that is take reasonable steps to avoid or reduce, the loss covered by the LDs clause.Most standard forms of construction contract have clauses to reduce a contractor's liability for LDs proportionately if any part of the works is certified as complete before the contract is completed in full.
Subcontracts and liquidated damages To minimise exposure, many contractors will seek to enter into contracts with the subcontractors on substantially the same terms as their contract up the chain.
Otherwise, the judge said, Dean and Dyball would effectively be able to take advantage of its own wrong which led to the delay in the first place.
Where an employer takes on two or more contractors to carry out work on the same project under separate contracts, the overall completion of the works will similarly require that work carried out by each of the contractors is dependent on the actions of the others.
As a result of these risks, most building contracts fix the damages that will be payable to the employer for late completion in advance.
These are referred to as 'liquidated damages' (LDs).