Académique Documents
Professionnel Documents
Culture Documents
Extension of Time
Termination of Contract
Dispute Settlement
Dinker Sharma
Baisakh 20, 2070
12/10/2017 1
Liquidated Damages
or
Delay Damages
2
Liquidated Damages
Liquidated Damages are remedies available
to any contracting party to compensate for the
financial loss suffered as the result of a
proven breach of contract.
Liquidated Damage acts as a deterrent to the
contractor not to take the contract works
casually.
In Common Law Countries, it is known as
Liquidated damages in Civil Law Countries, it
is known as Contractual Penalties.
3
Liquidated Damages conti
The third term General Law Damages also
exist which is the same as above but requires
to demonstrate the loss incurred upon breach.
Liquidated damages are agreed, determined
in advance, by the parties to the contract, and
included as a provision in the contract.
Normally for the contractor bonus may be
provided for early completion. Liquidated
damage is not intended to earn revenue for
the Employer.
4
Liquidated Damages conti
Liquidated Damages are set in advance with the
following legal principles
It is an amount of damage set out in the contract
It is a pre estimated, pre determined, agreed in
advance amount of damages for a particular
breach
The parties committing the breach shall be liable
to pay the other party a fixed or an ascertainable
sum. Parties agree in advance on an amount
payable
For each day/week or delay
For each percentage point by which the
performance requirements are not met
5
Liquidated Damages conti
The party suffering from the breach only
has to prove that a breach occurred, no
proof of the loss is required.
The agreed amount of damages shall be
payable whether the loss actually
suffered is greater, smaller or even nil
It is the duty of the injured party to
mitigate his loss using all reasonable
efforts
6
Liquidated Damages VS Penalties
Liquidated Damages are not enforceable by
Law if the sum recoverable is a penalty
The word penalty in the contract provision
should be avoided
In Construction contract the breach addressed
by Liquidated Damages is normally for late
delivery and should satisfy following Criteria:
Is the breach readily identifiable, for
example, late delivery or shortfall in
performance?
Is the method and criteria for determining
whether a breach has occurred capable of
being defined?
7
Liquidated Damages VS Penalties
10
Extension of Time
EOT
11
Project Delays
12
Extension of Time
Time is essence of the contract
Obtain program from the contractor in the form
specified in the contract
Revise program from time to time. Assess and
compare program achieved against original program
Obtain monthly or biweekly program
To monitor the actual progress of the work
To check that escalation is not claimed for work
done later
To take actions and resolve issues in time
To assess the effect of variations on completion of
the Project. 13
Major causes that have Implication on Time
Litigation
Slack in supervision
Slow decision making
Absence of fund flow
Delay in Land Acquisition
Local Law and problems
Delay in shifting of utilities
15
Termination of Contract
Termination of Contract
A contract can be brought to an end
When no further action is required
By breach
By mutual agreement
By frustration
The contract is said to be frustrated if an event occur
that Destroys the basis of the contract, which is not
the fault of either party. Both the parties are excused
from further performance and neither is liable to the
other in damages.
By convenience
Note: Termination is an extreme action and as far as
possible must be avoided unless otherwise.
Terminating by Contracting Parties
27
Projects without Disputes
Fantasy or Fact?
28
Major Players in Contract Implementation
Consultant Contractor
Employer
12/10/2017 29
Are Disputes good for Construction
Subcontractors go bankrupt
whilst waiting for dispute
settlement
Skilled people lost to the industry
Things go worse due to lack of
cash flow
Origin of Disputes
35
Compensation Events
36
Failure to comply is a breach of contract
ENTITLEMENT/ OBLIGATION
CAUSE
EFFECT
[THE BURDEN OF PROOF] 38
CLAIMS
40
The Processes available to resolve
disputes
Adjudication or Dispute
Resolution/
Arbitration /
Litigation
These processes are known as
ADR
Alternative Dispute Resolution
Benefits
Fair
Quick
Cost Effective
Alternate Dispute Resolution Mechanism
Court 44
Dispute Settlement through Adjudication
Proactive
DRB is organized before construction starts.
They meet at the job site periodically
Members are provided with contract document
Familiar with project procedures, contracting
parties, progress, site conditions etc.
Help the parties to solve the problems before
they escalate into major disputes
Party can proceed to arbitration if decision is not
acceptable
DRB only recommend
For value exceeding NRs 100 million (PPA 2063)
46
Dispute Settlement through
Arbitration/ Litigation
53