What are liquidated damages and how do you fight them?
Liquidated damages are a daily sum the contractor pays if the work finishes late. You fight them by showing the delay was not your fault, or that you were owed more time under the contract.
How the charge works
The contract sets a rate per day or per week. It applies from the date for completion until the work reaches practical completion. The rate was agreed up front, so the client does not have to prove its loss.
The client usually deducts the amount from payments or claims it as a debt.
Ways to challenge them
- Show the client caused part of the delay, such as late access or late drawings.
- Lodge an extension of time claim on time and in the right form.
- Check the date for completion was adjusted for every approved variation.
- Check whether the client's own delay stops the clock under the contract.
- Check the practical completion date was set correctly.
Why timing matters
An extension of time claim made late can be refused, and then the full charge may apply. Make the claim while the delay is happening, with a programme and records.
Every Australian state and territory has its own rules on how disputes over payment are handled. For example, Queensland allows an adjudication application usually within 30 business days of the payment schedule.
Related answers
Questions
Can the client charge liquidated damages and also claim other losses?
Usually the agreed rate is the limit for late completion. Check the contract wording.
What if both sides caused delay?
That is concurrent delay. How it is treated depends on the contract, so read the delay clauses first.
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