Q&As

Can the Employer recover liquidated damages ‘as a debt’ under a JCT contract before practical completion has occurred?

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Published on LexisPSL on 08/11/2018

The following Construction Q&A provides comprehensive and up to date legal information covering:

  • Can the Employer recover liquidated damages ‘as a debt’ under a JCT contract before practical completion has occurred?

Can the Employer recover liquidated damages ‘as a debt’ under a JCT contract before practical completion has occurred?

Clause 2.29.2.1 of the JCT Design and Build Contract (DB) 2011/2016 provides that, where a Non-Completion Notice has been issued (due to the Contractor having failed to complete the Works (or a Section) by the Completion Date), and provided that an initial notice has been given under clause 2.29.1.2, the Employer may give a further notice that:

‘he requires the Contractor to pay liquidated damages at the rate stated in the Contract Particulars, or lesser rate stated in the notice, in which event the Employer may recover the same as a debt…’

Similar wording is found in clause 2.32.2.1 of the JCT Standard Building Contract (SBC) 2011/2016.

Alternatively, the Employer may give notice that it will withhold or deduct liquidated damages from sums due to the Contractor (clause 2.29.2.2 of DB 2011/2016, clause 2.32.2.2 of SBC 2011/2016). However, in practice this may not always be possible—eg towards the end of the project if no further sums are due to the Contractor.

Recovering liquidated damages as a debt means that the Employer may demand payment of such sums from the Contractor. If the Contractor fails to pay, it could then be open to the Employer

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