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Streetwise Answers

Hello Streetwise,

We are electrical contractors working mostly on large commercial schemes, but we have recently become involved in a housing development which has "penalties" for not completing on time. We have heard of "liquidated damages". Are there ay differences?

John Antrebus,

Electrical Contractors Leeds.


Hi John,

There certainly are and you may be able to use it to your advantage!

Liquidated damages are a reasonable pre-estimate of the loss that an organisation will incur if work is completed late. Such sums would be recoverable from the party who caused the delay.

A penalty on the other hand is a sum included in the contract which is intended to penalise you by being far more than the actual costs resulting from the delay.

You might want to take a look at the Streetwise Guide to Liquidated Damages, but the specific rules can get quite complicated so you might want to let us have some more information.

Best regards,

Streetwise.


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