This document discusses penalty and liquidated damages clauses in contracts. It provides definitions and examples. Specifically:
1) Penalty refers to a sum named in a contract as payment for breach that is not a genuine pre-estimate of loss. Liquidated damages is a sum that is a genuine pre-estimate of the loss from breach.
2) Indian contract law allows for reasonable compensation for breach not exceeding any penalty or liquidated damages stipulated in the contract. Courts can reduce such sums if not a true estimate of damages.
3) Examples are provided of cases where courts reduced stipulated damages, including one where damages for delay in supplying pipes were reduced to reasonable compensation.
4) Stip
A thorough analysis of FIDIC and it implication on COnstruction industry explained in this presentation for the beginners. It has been broken down to simplified version
Construction Contracts: Basics of Contracts and Contract AdministrationGerald R. (Jerry) Genge
The CCDC 2 Stipulated Price Contract is the "go to" document for construction contracts. Learn the basic components and roles of eth parties to the contract.
A thorough analysis of FIDIC and it implication on COnstruction industry explained in this presentation for the beginners. It has been broken down to simplified version
Construction Contracts: Basics of Contracts and Contract AdministrationGerald R. (Jerry) Genge
The CCDC 2 Stipulated Price Contract is the "go to" document for construction contracts. Learn the basic components and roles of eth parties to the contract.
Breach of Contract is the one of the most important Factors in the effective implementation of the contract done between the parties.
The breaching of contract is the acts that is done against the terms and conditions of the contract that can lead to the termination of the contract.
The breaching can be done by any of the parties.
- Having a brief of FIDIC
- Understand the steps and stages of Contract Management Using FIDIC.
- Understand the Role of PM during construction project to protect the organization Business case.
Construction Contracts Management based on UK common law using more than 40 cases of law with references from the UK, USA regulations, and international rules plus some examples from standard forms of construction contracts such as JCT, NEC & FIDIC.
Determination of compensation due to a grant of EOT under FIDIC Conditions creates certain issues and the Society of Construction Law has set up a Protocol to overcome most of these issues with a well laid out procedure.
Construction Claims generally comes up between two parties of the construction contracts, and there can be several reasons which result in a claim such as a delay in the project, uninformed changes, misinformation, unforeseen circumstances and general conflicts. In UAE, as the constructions are on the rise, so the disputes are. Professional construction claims consultants Dubai offering services protecting the values of both the clients and the contractors.
Breach of Contract is the one of the most important Factors in the effective implementation of the contract done between the parties.
The breaching of contract is the acts that is done against the terms and conditions of the contract that can lead to the termination of the contract.
The breaching can be done by any of the parties.
- Having a brief of FIDIC
- Understand the steps and stages of Contract Management Using FIDIC.
- Understand the Role of PM during construction project to protect the organization Business case.
Construction Contracts Management based on UK common law using more than 40 cases of law with references from the UK, USA regulations, and international rules plus some examples from standard forms of construction contracts such as JCT, NEC & FIDIC.
Determination of compensation due to a grant of EOT under FIDIC Conditions creates certain issues and the Society of Construction Law has set up a Protocol to overcome most of these issues with a well laid out procedure.
Construction Claims generally comes up between two parties of the construction contracts, and there can be several reasons which result in a claim such as a delay in the project, uninformed changes, misinformation, unforeseen circumstances and general conflicts. In UAE, as the constructions are on the rise, so the disputes are. Professional construction claims consultants Dubai offering services protecting the values of both the clients and the contractors.
Remedies available to an innocent party when there is a breach of contract are
1) Rescission of contract;
2) Damages;
3) Specific performance
4) Injunction
5) Quantum Meriut
but for the purpose of answering the question, this slides covers on rescissions of contract and damages.
A public–private partnership (PPP) is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies
The PPP projects are good as it do not put financial implications on union and states and creating better infrastructural facilities to the people
This note considers whether a contract term can exclude all liability for latent defects and limit liability to defect repair or replacement. The clause is based on clause 36.9 from MF/1, the Model Form of conditions for electrical, electronic and mechanical plant from IMechE/IET.
The relevant cases are British Fermentation Products v Compair Reavell [1999] 2 All ER (Comm) 389 and in BHP Petroleum v British Steel [2000]2 All ER (Comm) 133.
The note was prepared by Sarah fox, 500 Words Ltd. She has reviewed, adapted, advised and trained on the MF/1 form of contract.
www.500words.co.uk
PRC Contract Law Principles and Risk Management in Contract DraftingRHKLegal
An overview of contract drafting techniques with regard to the PRC Contract Law principles and recent Supreme Court Directions. An analysis of limitation of liability and liquidated damages clauses in the China market context.
2. WHY??
1. Breach of contract by any of the two parties in a contract.
2. To compensate the loss suffered.
3. What?
In a contract, the parties may name a sum to be payable in the event of
breach.
1. Liquidated damages: If such sum is a genuine pre estimate of loss.
2. Penalty: If the sum is not a reflection of loss.
http://www.legalserviceindia.com/articles/li2.htm
4. Provisions
• Indian Contract Act – Section 73 & 74
• PWD for B-1 & B-2- Cl. 2
• CPWD form - Cl.2
• M.E.S form – Cl.50
5. • Sec. 73 states that “when a contract has been broken, the aggrieved
party is entitled to get compensation or any loss or damages which has
been inflicted to him/her naturally during the usual course of breach
of contract or about which the parties to the contract has prior
knowledge when they entered the contract .”
• Sec 74 states “When a contract has been broken, and if a sum is
named in the contract as the amount to be paid for such breach, or if
the contract contains any other stipulation by way of penalty, the party
complaining of the breach is entitled, whether or not actual damage or
loss is proved to have been caused thereby, to receive from the party
who has broken the contract reasonable compensation not exceeding
the amount so named or, as the case may be, the penalty stipulated
for”.
http://blog.ipleaders.in/liquidated-damages-and-penalty-in-india/
6. Law Suit-1: Reasonable Compensation
• ONGC vs. Saw pipes Ltd
• ONGC had claimed the liquidated damages for delay in supply of
casing pipes.
• Saw pipes opposed the action.
• Court directed the arbitral tribunal to assess the case with reference to
Fateh chand, Maula Baux and Rampur distillery
• Lastly, stipulated money was reduced and termed it as reasonable
compensation.
7. Stipulations in construction contracts
• Transgression – Delay in Handover
• Stipulations
1. General: 0.5-1% of contract price per day/per week
2. Govt. standards: 0.5-10% of contract price per week of delay.
Objections
1. It should be genuine estimate
2. Factors
8. Law suit-2
• Case: “A” did not supply five machines to “B” in stipulated time.
• Agreed terms: Penalty of 1% on the total value of the supply for
every three days up to 10% .
• A (Plaintiff) filed a suit against B (defendant) to relax the penalty.
• Defendant did not justify the loss, hence, the penalty was relaxed.
9. Other rules of Penalty/Liquidated damages
• When to evoke: Either during or after completion of contract
• Relaxation:
1. By communication (only for time)
2. Absence of terms
3. Satisfactory completion
• Only a right to sue.
