By: Peter Micevski
Contractors often bemoan the topic of liquidated damages
(otherwise referred to as "LDs"), and with good
reason.
It should go without saying that it is best to avoid having to
pay LDs in the first place. As hard as a contractor may plan and
prepare, there is no guarantee that it will not fall behind
schedule or miss critical deadlines.
If you choose to ignore the liquidated damages clauses in your
building contract when you sign it up, and you subsequently delay
the project, there is the potential for you to be exposed to
potentially catastrophic amounts of money to the head contractor or
principal under your building contract.
Building contracts, especially commercial building contracts,
commonly contain 'liquidated damages' or 'delay
damages' clauses which provide that a contractor is required to
pay a pre-determined sum of money, usually for delaying the
completion of the works under the building contract.
