Building & Construction Industry Security Of Payments Act
Powerful Legislation
For Construction Debt Recovery

Building & Construction Contracts – Liquidated Damages

Liquidated damages are the often the biggest issue to catch sub-contractors by surprise.

Sub-contractors will invariably sign a building & construction contract that has a “time for completion” clause clearly identified in the contract, and a “liquidated damages” clause also clearly identified in the contract.

As the job progresses, and the subcontractor is delayed baby others or weather, or the sub-contractor simply falls behind for whatever reason of their own making. the “time for completion” becomes less likely as the days march on toward that day.

The builder doesn’t appear bothered and assures the sub-contractor all is well, and insists the subcontractor shouldn’t worry about “liquidated damages”.

But, and it is a very big BUT…… The sub-contractor should be getting himself back on track if he has fallen behind, or, the subcontractor should be claim for an extension of time “EOT” for delays caused by others or the weather.

Obtaining an extension of time pushes out the “time for completion” and means the subcontractor will not be liable for liquidated damages providing they complete the work under the contract by the amended “time for completion”.

All too often the sub-contractor mistakenly trusts the builder not to enforce their right to claim “liquidated damages” when the job is not finished on time.

But, and again a very big BUT…… By the time the end of the job rolls around the builder’s margin isn’t what he would like it to be, their cashflow isn’t what they would like it to be and they have a client claiming liquidated damages from them.

And yes you guessed it…. All of a sudden the builder points out to the sub-contractor that they should have claimed for an “EOT”.

Don’t get caught out. Contact us before or during a project (not just after it finishes when it might be too late) and we will help you draft a “EOT” claim.

Contact us here