3.

Most construction contracts have provision for Liquidated Damages in the event the
contractor fails to complete the works by the Date for Completion.

Discuss the application of this provision of a contract and the principles of law underpinning its
application.

The clause of liquidation damages LD is a clause that allows the contracting parties to receive
compensation in the event that the other party fails to comply with the obligations of the contract,
the compensation clause contemplates an amount of money to be paid when the builder or his
contractor fail to comply with the clauses of the contract

Normally the LD clause in construction contracts is used when the contractor or builder fails to
complete the work in the time established in the contract, for which the parties agree that the
builder must pay a daily or weekly rate until the work is completed.

We should not consider Liquidated Damage as penalties, they are predetermined damages
estimated at the time of the formation of the contract based on an estimate of the real losses that
the client will have if the contractor does not meet the completion date of the work. This
calculation method can vary taking into account factors such as moving. accommodation however
it is of the utmost importance that the calculation in the contract is carried out accurately and real

The Liquidated Damage clause is beneficial for the client since it relieves him of the obligation to
prove his current losses in the event that there is a delay in construction

It is also beneficial for the builder who previously knows how much he will have to pay if he is late
in the construction, normally the contractor can negotiate the rates of Liquidate Damage and a
limit of liability, taking into account the risks.

Delays are very common in construction, so the negotiation of the terms of a payment due to
Liquidate Damage, is a clause where the will of the parties to the contract prevails and the
obligation that the contracts are executed in the manner in which the one that they remembered.