Liquidated damages (LDs): definition and example
An agreed contractual measure of damages for a specified breach, commonly delay, subject to the relevant conditions.
By Jack Butler-Kettle · Updated
Guidance for England and Wales. Check the contract, amendments and facts that apply to your job.
What it means in practice
Read this alongside SCL Delay and Disruption Protocol.
Liquidated damages set an agreed measure for a defined breach, often delay to completion. The contractual trigger, applicable completion date and notice requirements still need to be satisfied. An agreed rate avoids quantifying actual loss in that way, but does not make every proposed deduction valid.
Check extensions of time and the period claimed before calculating the exposure. Delay damages recovery examines the basis and evidence for a disputed deduction.
Worked example
The facts
A subcontract states an illustrative delay-damages rate of £500 per week.
What happens
The subcontractor checks the operative completion date after any agreed extensions.
It examines the alleged late period and required notices before applying the rate.
What this shows
A £1,000 calculation for two weeks is meaningful only if those weeks fall within a valid contractual claim.
Sources
- Delay and Disruption Protocol, 2nd edition, February 2017. Society of Construction Law.