Construction Law/Liquidated Damage

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Question
Dear Femi,

The Conditions of Contract stipulate that the Contractor would be liable to payment of liquidated damages, but it refers to the Appendix to bid about the sum the Contractor would be liable to pay per day as liquidated damage. However, there was no any Appendix to Bid included in the Contract. The sum to be paid per day as liquidated damage was not in effect specified in the Contract.

Would the Contractor be liable to payment of liquidated damage in the event of his failure to achieve completion within the time prescribed in the contract for reasons attributable to him?
If so, on what basis [what would the amount be per day?]  

I must be grateful to your replies in advance, and remain.

Alemu

Answer
Dear Alemu,

As usual, thanks for you question.

According to what you have described, since the appendix appears to be missing within the contract documents, it therefore calls for a fair and reasonable interpretation. There are two foundational questions to be answered in the event of the missing appendix. One, will penalty still be applicable under the contract? and two, if it will, what amount would it be?

The answers to these questions would be as follows:
1. Yes, penalty is still applicable because, it is evident, from the contract that, the contract anticipates application of penalty and that intent of the contract is confirmed by the clause which was neither deleted nor qualified as "NA" - not applicable which is the usual practice when such clauses are not intended to be enforced under the contract.

2. The determination of the amount is therefore another question as it is now evident that and to be construed that the contract is silent on the amount of the penalty per day. I recalled that, in a situation where the contract has no provision for quantification and evaluation of a particular volume or financial reimbursement of a liability or an obligation, one of the famous principle to be applied under law or contract falls under the principle of "quantum meruit" which means, reasonable amount commensurate to the penalty for similar default for similar contract. The reasonable amount could also be determined by the actual loss suffered with reasonable factor to make it the sole penalty for the default of the Contractor. The factor could either reduce the actual loss or increase it as the party may agree or as may be compared with similar project of same nature.

Hope the above is cleared.

Femi

Construction Law

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Femi Alofe

Expertise

I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts

Experience

Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

Organizations
1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

Publications
1. AACEI RP on Estimating, 2010

Education/Credentials
1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

Past/Present Clients
1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar

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