You are here:

Construction Law/Fidic IV 1987-92. LDs

Advertisement


Question
Dear Elliott
There is a confusion regarding when the liquidated damages (LDs) are due to be deducted or paid by the contractor. One view is that these are due when the actual TOC is issued and the amount deducted will be the number of days, elapsed between the actual completion and the stipulated completion date, multiplied by the amount per day of LDs. My opinion is that LDs become due when the contractual completion date is over and there is no EOT claim pending. The deduction will immediately start from any payment due to the contractor and there is no need to wait for the actual completion. The actual completion date is merely used to compute the total amount of LDs to be deducted. Please comment

Answer
Dear Abdul Majid Khan

I answered a similar question to this one just recently.  In the absence of any claims for EOT, I suggest that the Employer is entitled to deduct delay damages once the time for completion has expired.  Here is my previous answer.

The timing of payment of liquidated damages is not clear, considering clause 47 and 60.2.  There can be problems if the Contractor has submitted claims for extensions of time which are unresolved or still in dispute.  If an EoT were to be granted at a later date, then the Employer would have to repay any liquidated damages and pay interest for the time that they were deducted.  Clause 60.10 allows the Employer to deduct liquidated damages from any payment due under an IPC.

The Employer can deduct the liquidated damages from any payments certified by the Engineer for payment or from any other payments due to the Contractor.  It could be that the liquidated damages are greater than any payments which are due to the Contractor.  I recommend that the Employer submit a claim to the Engineer for liquidated damages.  If the Engineer agrees the claim, then the Employer instructs him to deduct the amount from the IPC and the Employer pays the certified amount.  

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Peter M. Elliott

Expertise

First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

©2016 About.com. All rights reserved.