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Construction Law/Why Performance Guarantee and Liquidated Damages Are Not Applicable in Consultancy Services Contracts

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Question
Dear Mr, Testro,

I hope this note finds you healthy and thank you for your usual expert advice.

I was wondering to know about a logical reason behind: Why obtaining performance guarantee is not required in consultancy services contracts and also why liquidated damages are not applicable in consultancy services contracts.

Although, the nature of delay or defaulting is same as construction contracts but the above two important clauses which may help the client to recover any damages are not applied in most of the consultancy services contracts.

Regards,
Mohammad Adil

Answer
Hi Mohammed
In ancient times the builders were tradesmen and the architects were gentlemen. Gentlemen never dealt in "trade" so there was a clear separation of the roles. Tradesmen were paid in money to make a profit - Architects were paid a fee for their services. This separation still pertains which is why the contractual arrangements are different.
The big difference is that a consultant is protected by a Professional Insurance Policy that covers any negligence.
If there are no LAD's then damages are at large and the consultant is liable for whatever costs the client can justify.
Best regards
Mike Testro

Construction Law

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Mike Testro

Expertise

Anything related to extensions of time and delay analysis.

Experience

45 years in the Construction Industry 15 Years as a consultant delay analyst - I now hold myself to be expert in this field.

Organizations
Society of Construction Law Adjudication Society ex Planning Engineers Organisation

Publications
6 articles on the relevance of the India Contract Act 1872 and its relevance to modern construction in India. Waiting Publication

Education/Credentials
Associate Member of the Institue of Building

Past/Present Clients
Currently employed in India by Punj Lloyd as expert delay analyst. Engaged in ongoing arbitrations and EoT claims. Prior an Indepenent consultant in delay analysis.

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