Construction Law/Liquidated Damages for the Design Consultant e
Project Status: Completed
LD: Liquidated Damages
Max LD : 10% of Contract price
Max LD allowed divided by per day LD = 30 days (maximum delay allowed)
There are 6 stages in the consultancy services. The Consultant delayed more than 30 days in the Stage 2. The Employer (instead of applying the maximum LD after the completion of Stage 2, waited till the consultant complete Stage 6 that too with 30 days delay) had applied max LD through the interim payment certificate at the Stage 6.
When the stage 6 is partially completed, Employer changed the whole design and instructed to revise from Stage 2 to Stage 6. The Employer had compensated the Consultant for the changes. During this revision the Employer instructed additional changes to the design (4 variations) and all of them were paid (without any issue), but still there were some delay at the variation stage itself but the Employer havenít applied LD for those.
After project completion the Consultant seeking repayment of recovered LD.
Consultant point of view:
1. Why LD was not applied at the early stage i.e. Stage 2 when the delay occurred (Client applied only at the Stage 6 instead of Stage 2)
2. Employer revised the design completely (scrapping the design carried out from stage 2 to stage 6), then how come the employer suffered delay damages due to the consultant delay and the employer applied LD in bad faith. Is it possible to apply LD
Definition for Contract Price: Contract price reflected in the statement of final account
i.e the Employer can apply maximum LD based on the revised contract price
LD clause in Contract:
If Consultant fails to complete the Construction Tender Documents or part of the SERVICES and EMPLOYER approval by the specified dates established in Appendix G (or authorized extension thereof), then CONSULTANT shall be liable to EMPLOYER for liquidated damages according to provisions of Article 8 of the General Conditions of Contract. The amounts of such liquidated damages shall be calculated at the rates of one third of one percent (1/3 of 1%) of the CONTRACT PRICE per day for each day or part of a day of delay up to a maximum of ten percent (10%) of the CONTRACT PRICE.
Set out the stages and the respective dates of completion
My answers will be general in nature because you have a bespoke contract. This really depends on the provisions of the contract and the law applicable.
As mentioned, the contract stipulate Completion Dates for each stage (Appendix G), then if the Consultant failed to complete the works(SERVICES) for stage 2 on or before the stipulated date of Completion for stage 2 , LD shall apply (your Article 8).
Bottom line is, LD shall be applied if the Contractor failed to complete the works on or before Completion Dates mentioned in Appendix G and the Contractor should have requested for an extension of time (assuming your contract have provision for this and the delay is not the Consultant's fault) to prevent LD and or claim for additional cost incurred due to changes.
Hope this helps.
Jonathan L. Peralta