In construction law, a claim for damages may be either a claim for unliquidated damages or liquidated damages. Whereas the sum of liquidated damages can be shown by the plaintiff, unliquidated damages are losses which the Court must determine. Some contracts are drafted by Sydney Construction Lawyers so as to address the amount of damages to be applied in relation to a specific breach – these are liquidated damages since they are ascertainable by the plaintiff.
Depending on the terms of the contract, liquidated damages may arise in a variety of circumstances. For example, where the principal (person hiring the contractor) delays completion, the contractor may be able to claim liquidated damages for losses incurred as a result of the delay under the terms of the contract. Similarly, where construction is delayed by the contractor, the principal may be in a position to claim liquidated damages against the contractor under the terms of the contract.
It is important to note that the liquidated damages specified by any term of a construction contract must be a genuine pre-estimate of the losses incurred. This is based on the notion that damages are recompense for losses that have been or would be incurred. Purported liquidated damages that are not reflective of a genuine pre-estimate of loss may be considered a penalty, which can be unenforceable.
Liquidated damages and unliquidated damages are often the basis of construction disputes and building disputes. Our Construction Solicitors have extensive experience assisting contractors, builders and owners deal a diverse range of construction disputes. To speak with an experienced Construction Lawyer, contact our office and arrange an appointment. We have branch offices conveniently positioned across the Sydney metropolitan area including in Parramatta, Bondi Junction, Hurstville and Campbelltown. For a full list of our office locations, with complete addresses, click on our Locations tab above or contact our main office line on (02) 9233 4048.
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