It has been commonly accepted that where a construction contract gives rise to ‘liquidated and ascertained damages’ (LADs) for breach of the contract terms, the liability for the LADs ends when the contract is terminated. It now appears that that assumption is wrong.
In a recent case, the Technology and Construction Court ruled that LADs could continue to accrue after a contractor’s contract had been terminated and it was replaced by a new contractor – LADs were ruled to accrue up to the end of the completion of the contract by the new contractor.
Whether this will apply or not will depend on the exact wording of the contract.
Contract Re-Think Required?
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