When Do Liquidated Damages Become an Irrecoverable Penalty?Sarah Fox
An overview of the recent case Makdessi v Cavendish [2013].
In this case the court reviewed agreed damages ie sums set out in a construction contract payable on breach of that contract. Such damages, known as liquidated damages or LADs are often payable for delay on construction projects.
This note summarises the judgment of the Court of Appeal.
For help writing simpler contracts or understanding complex ones, including how the court might view your limitations and exclusions of liability, email: sarah@500words.co.uk or visit www.500words.co.uk
When Do Liquidated Damages Become an Irrecoverable Penalty?Sarah Fox
An overview of the recent case Makdessi v Cavendish [2013].
In this case the court reviewed agreed damages ie sums set out in a construction contract payable on breach of that contract. Such damages, known as liquidated damages or LADs are often payable for delay on construction projects.
This note summarises the judgment of the Court of Appeal.
For help writing simpler contracts or understanding complex ones, including how the court might view your limitations and exclusions of liability, email: sarah@500words.co.uk or visit www.500words.co.uk
10 Essentials For An Effective Construction ContractSarah Fox
An overview of the 10 aspects every contract for a construction works package (however large or small) needs to include to make it an effective tool.
These 10 essentials are the foundation to the 500-Word Contract (TM), developed as a basis for construction contracts in England/Wales. They are also a checklist for your own terms and conditions.
For more information go to www.500words.co.uk or send Sarah an email sarah@500words.co.uk
The Case for Standard Forms of Construction ContractTom Joseph Mukasa
A public lecture presentation on 8 July 2016 by Tom Joseph Mukasa, (sponsored by the Institution of Surveyors of Uganda) at Kyambogo University, Kampala - Uganda.
Understand the relevant contractual provisions and different types of claims. Identify the major causes of construction claims and disputes. Learn how to handle your claims effectively using strategies and different solutions. Understand delay cost procedure and process. In depth review on the SOP Act. How to prevent disputes leading to litigation/arbitration/adjudication
SWOT ANALYSIS OF ARBITRATION AWARDS IN INDIAN CONSTRUCTION CONTRACTSIAEME Publication
Contract forms, terms, specification, analysis of rate and conditions of contract
are being followed by various governments departments in the field of civil
construction are not uniform. Against the backdrop of India’s burgeoning macroeconomic prospects, the weaknesses of the construction industry create challenges,
particularly with respect to settlement of disputes between the owner and contractor
that it will have to overcome. Arbitration awards have been studied and based upon
their analyses a series of survey questionnaire have been developed. The responses to
the above along with the gist of focused discussions and interviews with domain
experts forms the basis for SWOT analyses of arbitration awards.
Your Construction Subcontract. The 23 Points That Matter MostAlex Barthet
Construction contracts in Florida can be especially tricky to navigate. A subcontract is no exception; learn the fundamentals, it could save you a lot of money.
Payment in construction contracts: how to get paidBarry Hembling
A presentation to the Society of Construction Law giving practical advice on how parties should frame payment claims to achieve payment on construction projects and how such claims can be challenged taking account of recent legal developments in this sector.
Construction industry disputes are frequently arbitrated rather than litigated.This presents general information and common considerations when considering the use and application of arbitration to resolve construction and design deficiency claims. From a Hawaii business focus.
This seminar was part of the Bar Council practical construction law series presented by the Construction Law Committee to practitioners. It covers the topic of payments and common issues arising in the construction industry.
Project Controls Expo, 18th Nov 2014 - "CONSTRUCTION ACCELERATION— A GLOBAL T...Project Controls Expo
Constructive acceleration is a well recognised claim in the United States. The Federal Government’s Boards of Contract Appeals long ago created this claim and established the basic rules of entitlement concerning this type of claim. Thus, U.S. based contractors know what must be documented in order to recover in such situations. But when U.S. contractors are working outside the U.S. and are faced with this sort of situation, can they recover in arbitration or litigation in other jurisdictions? This paper examines constructive acceleration in various legal jurisdictions (both common law and civil law) around the world to determine whether a contractor is able to use this type of claim to recover damages.
10 Essentials For An Effective Construction ContractSarah Fox
An overview of the 10 aspects every contract for a construction works package (however large or small) needs to include to make it an effective tool.
These 10 essentials are the foundation to the 500-Word Contract (TM), developed as a basis for construction contracts in England/Wales. They are also a checklist for your own terms and conditions.
For more information go to www.500words.co.uk or send Sarah an email sarah@500words.co.uk
The Case for Standard Forms of Construction ContractTom Joseph Mukasa
A public lecture presentation on 8 July 2016 by Tom Joseph Mukasa, (sponsored by the Institution of Surveyors of Uganda) at Kyambogo University, Kampala - Uganda.
Understand the relevant contractual provisions and different types of claims. Identify the major causes of construction claims and disputes. Learn how to handle your claims effectively using strategies and different solutions. Understand delay cost procedure and process. In depth review on the SOP Act. How to prevent disputes leading to litigation/arbitration/adjudication
SWOT ANALYSIS OF ARBITRATION AWARDS IN INDIAN CONSTRUCTION CONTRACTSIAEME Publication
Contract forms, terms, specification, analysis of rate and conditions of contract
are being followed by various governments departments in the field of civil
construction are not uniform. Against the backdrop of India’s burgeoning macroeconomic prospects, the weaknesses of the construction industry create challenges,
particularly with respect to settlement of disputes between the owner and contractor
that it will have to overcome. Arbitration awards have been studied and based upon
their analyses a series of survey questionnaire have been developed. The responses to
the above along with the gist of focused discussions and interviews with domain
experts forms the basis for SWOT analyses of arbitration awards.
Your Construction Subcontract. The 23 Points That Matter MostAlex Barthet
Construction contracts in Florida can be especially tricky to navigate. A subcontract is no exception; learn the fundamentals, it could save you a lot of money.
Payment in construction contracts: how to get paidBarry Hembling
A presentation to the Society of Construction Law giving practical advice on how parties should frame payment claims to achieve payment on construction projects and how such claims can be challenged taking account of recent legal developments in this sector.
Construction industry disputes are frequently arbitrated rather than litigated.This presents general information and common considerations when considering the use and application of arbitration to resolve construction and design deficiency claims. From a Hawaii business focus.
This seminar was part of the Bar Council practical construction law series presented by the Construction Law Committee to practitioners. It covers the topic of payments and common issues arising in the construction industry.
Project Controls Expo, 18th Nov 2014 - "CONSTRUCTION ACCELERATION— A GLOBAL T...Project Controls Expo
Constructive acceleration is a well recognised claim in the United States. The Federal Government’s Boards of Contract Appeals long ago created this claim and established the basic rules of entitlement concerning this type of claim. Thus, U.S. based contractors know what must be documented in order to recover in such situations. But when U.S. contractors are working outside the U.S. and are faced with this sort of situation, can they recover in arbitration or litigation in other jurisdictions? This paper examines constructive acceleration in various legal jurisdictions (both common law and civil law) around the world to determine whether a contractor is able to use this type of claim to recover damages.
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.
An Attensity-sponsored preso. Overviews the Gains and Costs associated with social business programs. Use the information to help you determine the economic value of your social program.
No two chapter 11 cases are alike and no two chapter 11 cases involving a retail business are alike. There are, nonetheless, certain issues that tend to arise in most retail cases. Among them: the retention of a liquidation firm; lease assumption and rejection; the claim priority of rent during a month that straddles the Petition Date or a rejection date; and consumer deposit issues. This webinar addresses such issues.
Part of the webinar series: CHAPTER 11- INDUSTRY FOCUS 2022
See more at https://www.financialpoise.com/webinars/
Contractor’s ability to mitigate damages can be limited if coupled with uncertainty of the duration of the delay. HOOH is recoverable in certain prolonged delay situations and has been granted by courts and amicable settlements for more than half a century. The Contractor may recover the return that he would have achieved on other work had his resources not been detained on the Works due to the delay. The presentation highlights the different formulae used in the calculations and conditions precedent to do so.
We were asked to give a talk to colleagues as part of a "COP26 fortnight" at Penningtons Manches Cooper LLP on the benefits of a lifestyle eating less meat.
City of London Law Society - Submittal to BEIS on Statutory Retention Deposit...Francis Ho
A supplemental submission from the City of London Law Society's Construction Law Committee sent to the Department for Business, Energy & Industrial Strategy (BEIS) on 3 December 2018 regarding potential proposals to introduce a statutory retention deposit scheme for construction contracts in the United Kingdom.
City of London Law Society - Construction Law Committee - Response to Retenti...Francis Ho
RESPONSE OF THE CITY OF LONDON LAW SOCIETY CONSTRUCTION LAW COMMITTEE TO THE DEPARTMENT FOR BUSINESS, ENERGY & INDUSTRIAL STRATEGY'S CONSULTATION ON THE PRACTICE OF CASH RETENTION UNDER CONSTRUCTION CONTRACTS
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The KA Housing - Catalogue - Listing TurkeyListing Turkey
Welcome to KA Housing, a distinguished real estate development nestled in the heart of Eyüpsultan, one of Istanbul’s most promising districts.
Just 10 minutes from the bustling city center, Eyüpsultan offers a serene escape with the convenience of urban living. The direct metro line ensures seamless connectivity to all parts of Istanbul, making it an ideal location for residents who seek both tranquility and vibrancy.
KA Housing boasts unparalleled accessibility, with proximity to Istanbul Airport only 30 minutes away, facilitating easy international travel. Effortless city access is guaranteed by direct metro and transportation links to Istanbul’s cultural and commercial hubs. Quick access to key metro lines connects you to every corner of the city within minutes, making commuting and exploring the city hassle-free.
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The community and surroundings of KA Housing are enriched by close proximity to prestigious universities such as Haliç University, Bilgi University, and Istanbul Ticaret University, making it an ideal location for students and academics. The development is adjacent to the Alibeyköy stream leading into the Halic waters, offering serene natural escapes amidst lush greenery. Residents can enjoy the cultural richness of the area, surrounded by historical and cultural landmarks that blend leisure, nature, and culture seamlessly.
https://listingturkey.com/property/the-ka-housing/
Simpolo Tiles & Bathware
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Since the first steps were taken in 1977, Simpolo Ceramics has carved its niche as a consistently growing organisation with unparalleled innovation and passion rooted in simplicity.
We endure gratification for every experience we offer, created to share something meaningful. It may not resonate with the majority, but that makes us a class apart. If only a handful were to understand the purpose of our existence, we would be proud to have found our believers. Rather, people with whom we can share our beliefs.
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Design your space in your style with our very own Visualizer. Now, you can choose the tiles of your liking from our wide selection and see how they would look in a space. Select the tile from the multiple options and the visualiser will replace the surfaces in the image with the selected tiles. This way, instead of just your imagination, you can choose the tiles for your place by getting an actual picture of how they would look in a space. So, design your space the way you desire digitally and implement it in real life to get the best results!
You can also share this visualiser with others to help them design their space.
Committed to delighting customers with world-class ceramic products and services. Make Simpolo synonymous with the best quality and set new benchmarks of excellence for all stakeholders. Pursue best business practices with utmost integrity to make Simpolo an exciting organisation to work with, for vendors, channel partners, investors and employees alike.
Gain worldwide recognition in the field of ceramic building products through Research and Innovation and bring an enhanced lifestyle within reach for every household.
Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus o...Joseph Lewis Aguirre
Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus on Public Safety as Job #1, Engagement, Wealth of HOA, Branding, Communication, Culture, Civic Responsibility
Brigade Insignia offers meticulously designed apartments with modern architecture and premium finishes. The project features spacious 3,3.5,4 and 5 BHK units, each thoughtfully planned to provide maximum comfort, natural light, and ventilation.
https://www.newprojectbangalore.com/brigade-insignia-yelahanka-bangalore.html
Torun Center Residences Istanbul - Listing TurkeyListing Turkey
THERE IS LIFE IN ITS CENTER!
The most energetic spot of the city that will add utterly different pleasures to your life, with a park that will make Istanbul breathe, delighting indoor and outdoor bistros, cafes, restaurants, the brand-new Food Hall concept, where dozens of unique tastes are served together, market area, cinema, theater, fitness club, SPA and event venue...
All the pleasures that will enrich your lives are awaiting you on the most beautiful side of the city, at Torun Center Residences. In Mecidiyeköy, where the heart of Istanbul beats, business, life and entertainment opportunities are located at the exact center, at Torun Center, the most beautiful side of the city.
Penthouse apartments and different styles of flats from 1 + 1 to 4 + 1, from 100 to 425 square meters in a 42-story residence tower, have been designed for those who want to live in the center of magnificence. Torun Center is the redefinition of a better life with specially landscaped floor gardens, apartment options with private balconies, and automatic glass systems equipped with Trickle Ventilation that offers clean air comfort.
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Torun Center has many delightful details, from a swimming pool to sunbathing and resting terrace. With 24/7 concierge services, 24/7 security, valet, technical service, closed-circuit camera system (CCTV), central heating and cooling system, it makes your life easier.
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The two-story Torun Center Lounge, with its indoor and outdoor seating areas, children's playroom, private dining and TV lounge, promises unforgettable memories to you and your loved ones with its unique Istanbul view.
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A few steps from the Torun Center Residences, you can reach the city's most modern city square and open the doors of a quality city life. Torun Center Residences brings together on the same project the long-awaited city life for Istanbul and gourmet restaurants, cafes, gym and SPA, and state-of-the-art cinema and Artı Stage, hosting the most famous plays of the season.
Located at the intersection of alternative public transportation options such as the metro and Metrobus, Torun Center comes to the fore as the most accessible office for both sides of Istanbul. With a central location and rich transportation lines, Torun Center offices make life easier for employees and increase productivity.
Omaxe Sports City Dwarka stands out as a premier residential and recreational destination, offering a blend of luxury and sports-centric living. Located in the thriving area of Dwarka, this project by Omaxe Limited is designed to cater to modern lifestyle needs while promoting a healthy, active living environment.
One FNG by Group 108 Sector 142 Noida Construction UpdateOne FNG
One FNG by Group 108 is launching a new commercial project in Sector 142 Noida. Office space and high street retail shops on the FNG and Noida Expressway. For more information visit the website https://www.onefng.com/
Need MCA leads? No sweat! MCAs are great for small biz funding. Learn how to snag top-notch leads: businesses needing cash, with repayment ability, decision-makers, and accurate contacts. Use content, social ads, lead platforms, partnerships, and capture processes for quality leads.
https://www.leadgeneration.media/blog/b/streamline-your-mca-sales-process-with-pre-qualified-leads
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Sense Levent Kagithane Catalog - Listing TurkeyListing Turkey
Sense Levent offers a luxurious living experience in the heart of Istanbul’s vibrant Levent district.
This cutting-edge development seamlessly integrates modern design with natural elements, featuring live evergreen plants maintained by an advanced irrigation system, ensuring lush greenery year-round.
The building’s elegant ceramic balconies are both stylish and durable, enhancing the overall aesthetic and functionality. Residents can enjoy the 700m Sky Lounge, which provides breathtaking views of Istanbul and a perfect space to relax and unwind.
Sense Levent promotes a healthy and active lifestyle with a full gym, swimming pool, sauna, and steam room, all available in the building. The interiors are crafted with high-quality materials, ensuring a luxurious and inviting living space.
Designed with young professionals in mind, Sense Levent features 1+1 and 2+1 units with smart floor plans and balconies. The project promises high investment returns, with an expected annual return of 6.5-7%, significantly above Istanbul’s average ROI.
Located in the rapidly growing and highly desirable Levent area, the development benefits from ongoing urban regeneration projects. Its prime location offers proximity to shopping malls, municipal buildings, universities, and public transportation, adding immense value to your investment.
Early investors can take advantage of discounted units during the construction phase, with an expected capital appreciation of +45% USD upon completion. Property Turkey provides comprehensive rental management services, ensuring a seamless and profitable investment experience.
Additionally, robust legal support and significant tax advantages are available through Property Turkey’s licensed Real Estate Investment Fund. Levent is a dynamic urban hub, ideal for young professionals with its numerous corporate headquarters and shopping malls.
Sense Levent is more than just a residence; it’s a place where dreams and opportunities come to life. Contact us today to secure your place in this exclusive development and experience the best of Istanbul living. Sense Levent: Sense the Opportunity. Live the Dream.
https://listingturkey.com/property/sense-levent/
Lixin Azarmehr, a Los Angeles-based real estate development trailblazer, co-founded JL Real Estate Development (JL RED) in 2015 and serves as its CEO. Her expertise has propelled the firm to specialize in luxury residential and mixed-use commercial projects, with a portfolio that features upscale retail spaces and sophisticated care facilities.
Green Homes, Islamabad Presentation .pdfticktoktips
Green Homes Islamabad offers beautifully designed 5, 8, and 10 Marla homes near the airport and motorway. Enjoy luxury, convenience, and high rental returns in a prime location.
500 acres of brilliance await you here at Riverview City which offers modern living, effortless convenience, and a beautiful natural setting. It is a mega township by Magarpatta City in Loni Kalbhor, Pune. Enjoy easy access to work, schools, and fun while experiencing a perfect work-life balance.
Visit - magarpattacity.developerprojects.in
Elegant Evergreen Homes - Luxury Apartments Redefining Comfort in Yelahanka, ...JagadishKR1
Experience unmatched luxury at Elegant Evergreen Homes, offering exquisite 2, 3, and 4 BHK apartments in the serene locality of Yelahanka, Bangalore. These meticulously crafted homes blend modern design with timeless elegance, providing a harmonious living environment. Enjoy top-tier amenities and a prime location, making Elegant Evergreen Homes the ideal choice for discerning homeowners.
Urbanrise Paradise on Earth - Unveiling Unprecedented Luxury in Exquisite Vil...JagadishKR1
Immerse yourself in the epitome of luxury living at Urbanrise Paradise on Earth. These opulent 4 BHK villas, nestled off the prestigious Kanakapura Road in Bangalore, redefine elegance and sophistication. With meticulous craftsmanship, breathtaking design, and unparalleled amenities, Urbanrise Paradise on Earth offers a sanctuary where every moment is infused with luxury and serenity. Experience a life of grandeur and indulgence at this exclusive residential enclave.
Referans Bahcesehir which is being constructed, in the center of the most regional destination as Bahçeşehir, shines out with its central location and unique landscape including social facilities such as a fitness center, sauna, sports facilities, children’s playground and recreational areas.
Not only drawing attention for immediate surroundings including commercial centers and private schools but also providing the easily accessible location with closeness to Tem Highway and connection roads, ongoing construction of 3rd Bridge Connection roads and Metro Projects
Bahcesehir is a rising value in the great city of Istanbul… Located at a new transportation junction in the northwest of the City… Located at such a spot that the access roads for the 3rd bridge and for the 3rd Airport will reach the region in 2016. The Marmaray and the Subway will extend all the way to Referans Bahcesehir respectively in 2018 and 2019.
465 flats and 34 stores are designed with an outstanding approach and arranged with a unique perspective offering the following options: 1 plus 1, 2 plus 1, 3 plus 1, 3.5 plus 1, 4 plus 1, and 4.5 plus 1. It is planned so as to safeguard you and your loved ones based upon a modern, technological safety approach. As you experience the joy and luxury here, you will be content and feet at ease.
It is worth seeing both inside and outside with heart-warming cafes, tasty restaurants and elegant stores… And it is ready to offer a vivacious social life with a warm and cozy space design.
A folding swimming pool and indoor swimming pools, playgrounds, Turkish bath, sauna… It has them all. Everything you need for your well-being and for having a pleasant time will be at your service. You simply need to align the rhythm of life with the rhythm of Referans Bahcesehir.
https://listingturkey.com/property/referans-bahcesehir/
The SVN® organization shares a portion of their new weekly listings via their SVN Live® Weekly Property Broadcast. Visit https://svn.com/svn-live/ if you would like to attend our weekly call, which we open up to the brokerage community.
Olswang Construction Law Masterclass - October 2014 - Liqudated Damages and Penalties
1. Liquidated damages and penalties
7 October 2014
Ben Worthington, Senior Associate
ben.worthington@olswang.com | + 44 20 7067 3541
2. What are liquidated damages?
•Definition of liquidated damages
•A pre-determined sum payable by the defaulting party in the event of a
specified breach of contract
•Genuine pre-estimate of loss
•Liquidated v unliquidated damages
•Liquidated damages for non-delay related losses: Bluewater Energy Services BV
v Mercon Steel Structures BV and others [2014] EWHC 2132 (TCC)
2 www.constructiveblog.com
3. Why use liquidated damages?
•Complexity of claims in construction disputes
•Saves time and cost
•Avoids dispute procedures
•Avoids need to establish loss
•Certainty
•Cost of delay is clear –incentivises
•Risk of delay easier to price
•Limits liability
3 www.constructiveblog.com
4. Are liquidated damages an
exhaustive remedy?
•a liquidated damages clause normally covers all damages for non-completion
•Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30
•rate of LDs stated as "£nil”
•Court of Appeal held that parties had agreed that no damages would be
payable for the breach in question.
•Biffa Waste Services Ltd and another v Maschinenfabrik Ernst Hese GmbH and
another [2008] EWHC 6 (TCC)
•Biffa argued LDs was an exhaustive remedy only for delay not caused by a
breach of any obligation
•claimed unliquidated damages for breach of obligations of reasonable skill
and care which had caused a fire and, as a consequence, delay
•Held: no distinction between a ‘simple’ failure to complete and a failure to
complete caused by another breach –LDs were ‘the only monies’ due for
such default.
4 www.olswang.com
5. Defences to claim for liquidated
damages
A party may challenge the imposition of liquidated damages on the basis that:
•The liquidated sum is penal in nature
•The right to deduct LDs has not crystallised because:
•The breach is not within the scope of the clause
•A condition precedent for deducting LDs has not been complied with; or
•The clause fails for uncertainty: Bruno Zornow (Builders) Ltd v Beechcroft
Developments Ltd [1990] 51 BLR 16
•Sectional completion and partial possession
•No date in contract
5 www.constructiveblog.com
6. Penalty clauses - introduction
•The court will not enforce penalty clauses
•BUT: difficult to establish that a clause is a
penalty
•the courts are pre-disposed to uphold
liquidated damages clauses:
•court reluctant to interfere in a
commercial bargain
•contractor must establish penalty –
high bar
6 www.constructiveblog.com
7. Penalty clauses – general
principles
•Dunlop Pneumatic Tyre Co Ltd v New Garage Motor Co Ltd [1915] AC 79
•The use of the phrase “liquidated damages” in a contract is not conclusive
•Was the predominant function of the clause to deter a party from breaching
the contract (a penalty) or to compensate the innocent party for breach
(enforceable)
•The essence of a liquidated sum is that it is a genuine pre-estimate of loss,
judged at the date of the contract, not as at the time of breach
•But see: Unaoil Ltd v Leighton Offshore Pte Ltd [2014] in respect of
variations to contracts - where "...the contract is amended in a relevant
respect, the relevant date is… the date of such amended contract."
7 www.constructiveblog.com
8. Recognising a penalty clause (1)
•Is the purpose of the clause to intimidate or penalise, or is to
compensate?
•Alfred McAlpine Capital Projects Ltd v Tilebox Ltd [2005] EWHC 281
(TCC)
•Is the liquidated sum reasonable?
•Is the liquidated sum extravagant or unconscionable by comparison
with the greatest loss that might be suffered?
8 www.constructiveblog.com
9. Recognising a penalty clause (2)
•Employer does not have to accurately predict its likely loss
•Philips Hong Kong Ltd v Attorney-General of Hong Kong
•“it will not normally be enough to identify situations where the
application of the provision could result in a larger sum being
recovered by the [Employer] than his actual cost”
•Court will investigate the background to the contract at the date the
contract was entered - what is a reasonably foreseeable loss?
•If the Employer can show that he arrived at the sum with calculations /
projections (e.g. loss of income, increased financing costs) then strong
evidence of genuine pre-estimate
9 www.constructiveblog.com
10. The challenge succeeds…
•Unaoil Ltd v Leighton Offshore Pte Ltd
•Agreement in relation to an oil pipeline –price $75M
•LDs payable to sub-contractor if contractor breached agreement -
$40m (stipulated as a “genuine pre-estimate of loss”)
•Contract price later varied –minimum price $55M
•The liquidated sum of $40 million was "manifestly one which could no
longer be a genuine pre-estimate" given that the amendment reduced
the total price.
10 www.constructiveblog.com
11. The challenge fails…
•Alfred McAlpine v Tilebox
•LDs = £45,000 per week
•2 year delay (LDs circa £5.5m)
• £45,000 - “at or slightly above the top of the range of possible weekly
losses flowing from the delay”
•the gap between it and an appropriate yardstick “was not nearly wide
enough to warrant characterising this clause as a penalty”
11 www.constructiveblog.com
12. The commercial justification test
Azimut-Benetti SpA v Healey
•Shipbuilding contract:
•buyer to pay shipbuilder $38M over 3 years
•In the event of a late payment, the builder could end the contract and retain (or
recover) 20% of the contract price by way of LDs –any remainder would be repaid
•A common alternative to this was for the builder to retain all installments paid,
build the yacht and then sell it - this could take a very long time for builder to
realise its loss
•the purpose of the clause was not to deter breach of contract, it was
commercially justifiable as providing a balance between the parties
•Both parties had the benefit of expert advice and terms were freely entered
into
12 www.constructiveblog.com
13. The commercial justification test(2)
•Court of Appeal in Cavendish Square Holdings BV and another v El
Makdessi [2012] EWHC 3582
•Rejected approach of rigid dichotomy between a genuine pre-estimate of loss,
on the one hand, and a penalty on the other
•There are provisions which, while they do not reflect a genuine pre-estimate
of loss, nevertheless have a commercial justification which means that their
predominant purpose is not to deter breach
•starting point is to consider whether the relevant provision is extravagant and
unreasonable
•Even if the sum is extravagant and unreasonable, not necessarily penal; a
commercial justification for the provision may lead to conclusion that deterrent
was not the dominant purpose of the term
13 www.constructiveblog.com
14. What if a challenge succeeds?
•party can claim general damages
•BUT the failed liquidated damages clause may act as a cap on the general
damages
•limited case law on this point
•unlikely that an Employer can impose excessive liquidated damages and then
avoid its effect to recover more
14 www.olswang.com
15. Practical tips
•Be clear as to what event triggers the right to deduct damages
•Ensure that there is an adequate procedure for extending time
•Ensure LDs clause provides for sectional completion or partial possession i.e.
•It gives specific rates of LDs for specific sections
•reduces the rate of LDs if the employer takes partial possession
•Properly record any forecasts /estimates of loss / negotiations relating to the
liquidated sum
15 www.olswang.com