The Effect Of Nominal Rates For Liquidated Damages

Not an exhaustive remedy for a delay

This article discusses the impact of the statutory warranties under section 18B of the Home Building Act 1989 (NSW) (HBA) on liquidated damages under a construction contract.

Introduction

Generally, liquidated pre-ascertained damages are an express agreement between the parties of the genuine pre-estimate of the loss and damage suffered by a party in the event the other party fails to complete by the date for completion.

There has always been a presumption that when a liquidated damages provision exists in a construction contract, it is the intention of the parties that liquidated damages are the sole monetary remedy for a failure to complete by the date for completion.¹ This may no longer be the case for a residential construction contract where the statutory warranties under the HBA are implied.