Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract. [67] Where a contract expressly provides a party can recover both liquidated and actual damages, the liquidated damages provision will be unenforceable. Liquidated Damages (LDs) are treated very differently across the Gulf region and from the position as understood within the English common law jurisdiction. Liquidated damages calculation can be extremely difficult, especially because it can be hard to prevent future losses. Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract. Liquidated damages cannot be a penalty for the agency to club the contractor into compliance with punchlist, warranty, paperwork or other requirements that do not affect the use of the project as contemplated by the contract. We are preparing a contract for construction of an aircraft maintenance hangar. still deduct liquidated damages? Basics of Liquidated Damages. Moreover, liquidated damages must be a reasonable attempt to approximate the actual damages. It should include a clause that sets out the specific amount of damages you are to receive if a specific type of breach occurs. What Are Liquidated Damages? A liquidated damages clause specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract. When there is a breach of contract, it … Liquidated damages are predetermined penalties assessed against importers that have violated the conditions of their Customs bond. Liquidated damages are a fact of life when it comes to construction contracts. Example: Amount of Liquidated Damages shall not exceed 10% of the contract value. Is there a legal limit to the maximum amount of Liquidated Damages to be applied? However, for these damages to be upheld in court, the calculations must be reasonable. Use a maximum amount or a maximum period for assessing liquidated damages if these limits reflect the maximum probable damage to the Government. In relation to construction contracts, the event is usually failure by the contractor to complete by the completion date specified in the contract. The whole idea of liquidated damages is that it is a pre-estimated amount which the parties have agreed shall be paid on the occurrence of some event. Use a maximum amount or a maximum period for assessing liquidated damages if these limits reflect the maximum probable damage to the Government. These damages will be charged on a daily basis until the project is finished. 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