Level 3 Questions - Centrica SLP Liquidated Damages

Question 1

What did you advise your client in terms of liquidated damages?

Answer 1

• Additional professional / design fees
• Extra running costs for the works
• Storage costs
• Rental costs
• Loss of profit
• Loss due to extending financial costs (interest payments)

Question 2

What was the rate of liquidated damages on Centrica’s SLP?

Answer 2

£1,500 per week

Question 3

How are liquidated damages calculated?

Answer 3

On a daily or weekly basis

Question 4

What are the rules for liquidated damages?

Answer 4

• Cannot be punitive
• Must be a realistic estimate of the losses incurred
• Contractor can dispute LDs once in contract if they’re deemed punitive

Question 5

How are liquidated damages deducted?

Answer 5

• Once a certificate of non-completion is issued

- Client administrator deducts via payless notice

Question 6

What if LDs are claimed but the client fixes a later completion date?

Answer 6

Then the LDs must be repaid to contractor

Question 7

Does LDs affect the QSs assessment of the works?

Answer 7

No, the QS is only to assess the value of the works on site

Question 8

What happens if the contractor is unhappy with the amount of liquidated damages?

Answer 8

They should have been reviewed and agreed prior to signing the contract

Contractor can appeal if they believe the LDs are punitive

Contractor can appeal to courts and the courts will ask the client to substantiate the build up

Question 9

What are Unliquidated Damages?

Answer 9

Damages, where the exact amount has not been agreed and are typically determined by the courts

Question 10

Why might a client have to claim Unliquidated Damages?

Answer 10

Contract may prevent LDs from being claimed

Actual losses may be significantly different to the LDs estimated at the time of signing the contract