You are here:

Construction Law/Liquidated damages vs. Contract price


Contract Fines
Contract Fines  
Dear Sir

1- if the contract is remeasured with original contracted amount = X , then at the end of the project the contract amount shall be Y (after implementing the actual quantities and applying variations , claims , etc)
In view of the the relevant contract clauses, the max liquidated damages (fines) shall be 10% of X or Y?

2- if the applicable law states the following: "the final payment certificate, which shouldn't be less than 10% , will be released after taking over the Works from the Contractor" ... how do you understand this 10% ? 10% of which amount ?

Thank you Sir

Dear Khaled,

1.  The devil is in the detail, as always.  The fines are applied to the total value of the contract.  The total value of the contract shall be subject to an increase or decrease .....  Thus the value Y is used for the calculation of fines.  There is a problem that there are two definitions of the value of the contract, but the later definition rules.  In FIDIC, this problem is resolved by defining different two values, the Accepted Contract Sum, the accepted offer, and the Contract Price, which includes the Accepted Contract Sum plus all variations and re-measurements.

2.  I do not understand this question.  Does it refer to the 'final certificate' or the release of retention?  In any case, the operative word is 'shouldn't', which defines a desire rather than an obligation.  Thus the final certificate can be any value that is appropriate.  

Construction Law

All Answers

Answers by Expert:

Ask Experts


Peter M. Elliott


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 before submitting a question.


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')

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

B Sc(Hons) in Civil Engineering

©2017 All rights reserved.