- A return to orthodoxy—Supreme Court decides that accrued liquidated damages remain enforceable after termination (Triple Point v PTT)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Issue 1—liquidated damages clause
- Issues 2 and 3—liability cap
- Case details
Commercial analysis: This is the long-awaited Supreme Court judgment on the applicability of liquidated damages where the contractor never completed the work. The decision also includes important commentary on the meaning of ‘negligence’ in exemption clauses. The case involved a software development contract which provided for liquidated damages per day of delay ‘from the due date for delivery up to the date PTT accepts such work’. The Court of Appeal had previously decided that each case turned on the wording of the clause, and that the liquidated damages clause in this case had no application where the work was never completed. The Supreme Court has now reversed the Court of Appeal’s decision and confirmed that liquidated damages typically apply up to the point of termination, as the contrary view is inconsistent with commercial reality and the function of liquidated damages. This gives contracting parties, including those in the construction and infrastructure industry, renewed certainty over the recoverability of accrued liquidated damages in the event of work not being completed before the contract is terminated. Written by Mathias Cheung, barrister at Atkin Chambers.
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