The parties to construction contracts may be well advised to check that the LD clauses in their contracts convey that position and do so clearly.
In a long-awaited decision which overturned the Court of Appeal’s ruling in the Triple Point Technology vs PTT Public Company case, the UK Supreme Court confirmed the general law of LDs, which is that—absent clear words to the contrary—they accrue up to the date of termination of a contract regardless of whether the contractor completes the work; after that, general damages are recoverable. This approach was held to reflect “commercial reality and the accepted function of liquidated damages.” Although the contract in question was not a construction contract, the decision is equally relevant in the construction sphere.
By way of reminder, Triple Point failed to complete the works under Phase 1 of a contract for the design, installation, maintenance and licencing of software. Despite agreeing a revised project plan, PTT gave notice to terminate.
Reprinted courtesy of Vincent C. Zabielski, Pillsbury and Julia Kalinina Belcher, Pillsbury
Mr. Zabielski may be contacted at vincent.zabielski@pillsburylaw.com
Ms. Belcher may be contacted at julia.belcher@pillsburylaw.com
