Contractual Bars On Interest In Infrastructure Contracts: Scope And Equitable Limits

Delayed projects are a commercial reality in infrastructure contracts, often caused by factors solely attributable to the employer, such as late site handover, delayed approvals, and design changes. These delays increase the contractor's costs and frequently postpone payments due under Running Account (RA) bills, which themselves depend on certifications and approvals controlled by the employer. Despite this, most standard-form construction contracts provide that no interest is payable on delayed payments, leaving contractors to bear the monetary burden, creating an obvious financial imbalance between the contractor and the employer. Since interest is essentially compensation for being kept out of money, this note argues that such interest-barring contractual clauses cannot operate absolutely.