Liquidated Damages - ´Nil´ And ´N/A´ Still Causing Uncertainty

Parties to a construction contract need to be very careful when completing contracts in relation to liquidated damages, particularly where it is not intended that liquidated damages apply.

There have been a number of cases recently where contractors have argued that the insertion of 'Nil' or 'N/A' by the parties means that the principal is unable to recover anything from a contractor for late completion. The argument is that the principal has effectively excluded its rights in relation to time claims altogether by completing the contracts in this way.

The recent decision of the Western Australian Court of Appeal in J-Corp Pty Ltd v Mladenis [2009] WASCA 157 has reiterated the fact that this issue does create uncertainty and ambiguity and that parties should be clear in respect of either preserving or excluding the common law right to damages for late completion.