A fixed amount of damages as a genuine pre estimate of losses should a contractor finish works later than that agreed in the contract or contract programme.

An agreed rate of damages to be paid by the contractor to the employer in the event of a particular breach of contract—most commonly delay to the completion of the works. Other types of LADs include performance LADs and target internal area LADs. The agreed rate for delay LADs is usually a rate per day or week of delay and starts from the date for completion.

A liquidated damages clause is a clause whereby the parties to a contract fix in advance a sum of money to be paid by the defaulting party to the innocent party in the event of a breach.

This Practice Note explains what liquidated and ascertained damages (LADs/LDs) are and their purpose in a building contract. It considers the difference between liquidated damages and general (or unliquidated) damages and looks at the enforceability of LADs provisions and common grounds for challenging them (including that the clause is a penalty). The Practice Note also looks at how much LADs should be, capping LADs and the risks of inserting ‘nil’ or ‘N/A’ as the amount of LADs. For summaries of key cases that consider, or are relevant to, LADs clauses in construction contracts, see Practice Note: Liquidated damages in construction contracts—case law. What are liquidated damages? If the parties to a construction contract agree to liquidated damages, they are agreeing, in advance, to a fixed sum that will be payable as damages in the event that a particular identified breach of contract occurs. Liquidated damages are often also referred to as liquidated and ascertained damages and the acronyms ‘LDs’ and ‘LADs’ are both commonly used to refer to them. When liability for LADs occurs, they can

This Practice Note summarises some of the key and/or recent cases that concern, or are relevant to, liquidated and ascertained damages (LADs) in construction contracts. It identifies issues that commonly arise in disputes concerning claims for LADs and the interpretation of LADs provisions, and provides summaries of cases in which the courts have addressed those issues. It is not intended to be a comprehensive account of all authorities on LADs, but may be a useful starting point for construction lawyers dealing with LADs claims, or drafting LADs provisions. For more information on LADs in construction contracts, including the difference between LADs and general damages, LADs provisions in standard form contracts, the development of the law on penalty clauses, and grounds for defending claims for LADs, see Practice Note: Liquidated damages in construction contracts. For guidance on the drafting and negotiation of LADs provisions in construction contracts, see Checklist: Liquidated damages in construction contracts—practical tips. ‘Penalty’ test LADs clauses are often challenged on the basis that they are a ‘penalty’. If a court finds that the amount payable under an LADs clause, or

This Checklist sets out drafting tips to take into account when drafting or negotiating liquidated damages (LADs) provisions in a building contract, focussing on LADs for late completion. It sets out practical tips and guidance intended to help ensure that LADs provisions in a building contract will be enforceable. The parties must: • ensure that the building contract makes specific provision for the payment/deduction of LADs in the event of delay • retain any correspondence concerning the relevant clause(s) of the building contract, as it will be admissible as evidence of the reasons for the drafting of the liquidated damages clause and the level of LADs set by the contract • ensure that the building contract sets out a trigger date from which LADs will run and provision for this to be re-fixed to allow for any extension of time due to an act of prevention • be able to evidence the steps taken to estimate the loss that would result from late completion—keep a good record of how the LADs figure was calculated, including any

The flowchart below summarises the key steps required in order for an employer to be able to claim or deduct liquidated

The flowchart below summarises the key steps required in order for an employer to be able to claim or deduct liquidated damages under the JCT Design and Build Contract 2024. Although it focuses on

The flowchart below summarises the key steps required in order for an employer to be able to claim or deduct

As seen in Practice Note: Contract interpretation—distinguishing between liquidated damages and penalty clauses, the task of determining whether or not a liquidated damages clause may be held to be unenforceable as a penalty is not always an easy one. While it will be a matter of construction for the courts in each case, there are a number of factors to consider when analysing the scope of an alleged liquidated damages clause and whether or not it may be susceptible to challenge as a penalty. If drafting a liquidated damages clause, it is essential that you keep these factors in mind in drafting the clause (and its relationship with related clauses). See: • Drafting and negotiating a liquidated damages clause—checklist • Precedent: Liquidated damages clause For specific consideration of how clauses in commercial contracts which provide for ‘default interest’ have been considered in the authorities, see: • Penalty interest rates in commercial contracts • Contract interpretation—distinguishing between liquidated damages and penalty clauses—When might default interest be a penalty? For specific considerations for those advising in

This Practice Note examines the issues that arise in relation to the use of liquidated damages clauses as an alternative to claiming damages for breach of contract. It considers examples of liquidated damages clauses for the employer or the employee. It compares lawful liquidated damages clauses with penalty clauses and considers the use of repayment provisions. Relevant case law is also examined. Debt or damages An employee may have an action against their employer for wages and other sums due under the contract, where: • they have performed the work or service for which the payment is due • they are ready to perform the work but are prevented from doing so by the employer Equally, an employer may seek to hold the employee liable in damages for breach of contract, for example where: • the employee has failed or refused to perform the contract of employment • the employee has breached their duty of competence or care However, instances of employers suing employees (or ex-employees) in these circumstances are rare because: • it

A liquidating partner is a partner in a partnership who is responsible for winding up the firm’s affairs when it is dissolved or placed into liquidation. In practice, this usually means realising partnership assets, collecting debts, paying or providing for partnership liabilities, and distributing any surplus to the partners in accordance with the partnership agreement or applicable partnership law.The expression “liquidating partner” is descriptive rather than a defined statutory term in the partnership legislation of England and Wales, Scotland, Northern Ireland or Ireland. The role may arise by agreement in the partnership deed, through appointment by the partners, or in some cases by order of the court or in conjunction with an insolvency practitioner.Key legal issues for a liquidating partner include authority to bind the firm during the winding-up, fiduciary duties owed to other partners and creditors, priority of distributions, accounting obligations, and potential personal liability for misapplication of assets or breach of duty. Usage of the term and its practical implications is broadly consistent across the UK and Ireland, though detailed procedures may interact with different insolvency and court rules in each jurisdiction.