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1 – 10 of over 2000
Article
Publication date: 13 April 2012

Daniel Brawn

The purpose of this paper is to examine the relationship between extensions of time and payment of liquidated damages under construction contracts in English law.

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Abstract

Purpose

The purpose of this paper is to examine the relationship between extensions of time and payment of liquidated damages under construction contracts in English law.

Design/methodology/approach

This paper sets out the law relating to granting extensions of time and liquidated damages and examines the effect of one upon the other. The JCT form of contract is used as an example, although it is submitted that the position is the same under other forms of contract. Case law is examined to illuminate the judicial approach and highlight inconsistencies, and consideration is given to the position in other jurisdictions.

Findings

This paper examines the effect of delaying events in particular circumstances, including where time is “at large”, sectional completion, partial possession, set‐off of liquidated damages and liquidated damages after termination of the contract. Particular attention is paid to concurrent and sequential delays; where both parties are at fault, it may be appropriate to deny the employer any entitlement to liquidated damages and deny the contractor any entitlement to loss and expense.

Practical implications

An understanding of the effect that delaying events have upon the contractor's right to an extension of time and the employer's entitlement to liquidated damages is critical for successful project completion. This relationship is not always straightforward and judicial approach is not always consistent. Clarification is required as to the effect of sequential delays.

Originality/value

This paper is of value to researchers and practitioners in establishing the legal position in an area that is often complex and obscure.

Details

International Journal of Law in the Built Environment, vol. 4 no. 1
Type: Research Article
ISSN: 1756-1450

Keywords

Open Access
Article
Publication date: 14 December 2022

Hyun Soo Doh

This paper aims to develop a credit-risk model in which firms face rollover risk, and the markets for defaulted assets are segmented due to entry costs. The paper shows that…

Abstract

This paper aims to develop a credit-risk model in which firms face rollover risk, and the markets for defaulted assets are segmented due to entry costs. The paper shows that reducing the entry costs in this economy may decrease the total surplus of the economy. This outcome can arise because when market barriers are lifted, the gap between the liquidation prices across the markets will shrink, but then the market that would experience a price drop may face more bankruptcies because the rollover risk will increase in that market. The paper describes under which condition such an intervention policy improves or hurts the total surplus.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. 31 no. 1
Type: Research Article
ISSN: 1229-988X

Keywords

Article
Publication date: 27 September 2013

Philip Davenport and Michael C. Brand

In Australia, compulsory rapid adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) (or the equivalent legislation another Australian State…

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Abstract

Purpose

In Australia, compulsory rapid adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) (or the equivalent legislation another Australian State or Territory) is a common way that payment claims under commercial construction contracts are decided. Construction contracts often contain penalty clauses. In particular, time bar clauses have been used to impose a penalty upon claimants and are frequently raised by a respondent as a reason for withholding payment. In the recent case of Andrews v. Australia and New Zealand Banking Group [2012] HCA 30 (“the Andrews case”), decided by the high court of Australia, the court has described how Australian courts must deal with penal provisions in contracts. The purpose of this paper is to consider the effectiveness of time bar clauses in the light of the penalty doctrine enunciated in the Andrews case.

Design/methodology/approach

A “black‐letter” approach is adopted to analyse and explain the effectiveness of time bar clauses in the light of the penalty doctrine enunciated in the Andrews case.

Findings

In the Andrews case, the high court decided that a penalty may arise where there is a stipulation in a contract in favour of a second party and upon the failure of that stipulation (the primary stipulation) there is a secondary stipulation that imposes on the first party an additional detriment to the benefit of the second party. If the second party can be compensated for the failure of the primary stipulation then to the extent that the additional detriment imposed on the first party exceeds that compensation, it is a penalty. In the context of time bar clauses, if a construction contract provides that when one party (the first party) fails, within a time prescribed by the contract, to give the other party (the second party) notice of a claim for extra remuneration or an extension of time, the consequence is that the first party forfeits an entitlement to be paid money that the party would otherwise be entitled to claim, or the first party becomes liable to pay the second party money, the penalty doctrine might apply.

Originality/value

The penalty doctrine is applicable to all contracts. The analysis of the Andrews case presented in this paper may be of interest in international jurisdictions, particularly where statutory adjudication for the construction industry has been introduced or is being contemplated.

Details

International Journal of Law in the Built Environment, vol. 5 no. 3
Type: Research Article
ISSN: 1756-1450

Keywords

Book part
Publication date: 24 March 2005

Paul Povel

We show why investors may prefer not to be a firm’s unique lender, even if they are in a strong bargaining position. Some firms need additional funds after a first investment…

Abstract

We show why investors may prefer not to be a firm’s unique lender, even if they are in a strong bargaining position. Some firms need additional funds after a first investment: providing additional funds is rational after the first investment is sunk, but together the two investments are unprofitable. A unique lender will always provide additional funds and make losses. Two creditors can commit not always to provide funds: inefficient negotiations over debt forgiveness may end with a project’s liquidation, which is harmful ex post, but helpful ex ante, if it keeps entrepreneurs with nonpromising projects from initially requesting funds.

Details

Research in Finance
Type: Book
ISBN: 978-0-76231-161-3

Book part
Publication date: 30 September 2021

Peter Theodore Veru

One of the most important, least-known documents of the American Revolution was a 25-page pamphlet published in Amsterdam early in 1787: An Explanatory Message Concerning the Funds

Abstract

One of the most important, least-known documents of the American Revolution was a 25-page pamphlet published in Amsterdam early in 1787: An Explanatory Message Concerning the Funds by Pieter Stadnitski. 1 Within a year of its publication Peter Stadnitski's Message quite literally revolutionized American sovereign finance. My paper will summarize in detail the report's content and analyze its arguments in light of Dutch archival materials including deeds, newspaper reports, and letters, as well as congressional records from American sources. It will describe what Dutch investors knew (and did not know) of the state of American public finance and American political landscape, and the Dutch financial community's view of the American future. Its essential argument is that thanks initially to Stadnitski's persuasive case and ultimately to the success of the trusts he pioneered, Dutch investment specialists came to see the American republic as a safe haven at a time that Dutch Republic's own future seemed increasingly perilous. If their dream of achieving a new Golden Age through trade and investment with the new nation ultimately proved illusory, the effects of Dutch capital in creating financial stability for the United States government and igniting the first peacetime economic expansion in American history were revolutionary indeed.

Details

Research in Economic History
Type: Book
ISBN: 978-1-80071-880-7

Keywords

Article
Publication date: 12 July 2011

Maree Chetwin

The paper aims to examine the judicial approach to some aspects of contract damages in England and Wales, Australia and New Zealand.

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Abstract

Purpose

The paper aims to examine the judicial approach to some aspects of contract damages in England and Wales, Australia and New Zealand.

Design/methodology/approach

The paper is an analysis of judgments of the three jurisdictions and academic commentary.

Findings

Generally, there is uniformity in the assessment of damages in the jurisdictions discussed as is illustrated with liquidated damages and the adherence to the judgment of the House of Lords. However, the same adherence is not evident in the case of lower court judgments in the controversial area of “consequential loss”. Although not a remedy, it is an integral part of the assessment of damages process when included in exception clauses.

Originality/value

The research highlights the need for knowledge of the legal issues to ensure that the contract covers what is intended so that a party is not without a remedy when the contract fails.

Details

International Journal of Law in the Built Environment, vol. 3 no. 2
Type: Research Article
ISSN: 1756-1450

Keywords

Article
Publication date: 1 August 2005

David Greenwood, Keith Hogg and Stanley Kan

The normal way of dealing with damages for delay in a construction contract is to use a Liquidated and Ascertained Damages clause. Such clauses specify a preset sum to be due to…

1209

Abstract

The normal way of dealing with damages for delay in a construction contract is to use a Liquidated and Ascertained Damages clause. Such clauses specify a preset sum to be due to the client for every day, week or month by which the contractor fails to meet the works completion date. However, the greater part of the value of construction work is actually carried out by subcontractors, and there is little or no published evidence as to how their contractual responsibilities for delays are determined and pursued. Theoretically, there are a number of possibilities (none of which is entirely satisfactory to both parties) and the logic and implications of each is discussed. A survey was conducted to discover the methods that are actually used, their incidence, and whether it was possible to relate the different approaches to the attributes of particular subcontractors or to specific situations. The most commonly encountered approach was for subcontract damages to be based upon a proportion of those set under the main contract. Interestingly, this is neither the approach incorporated within industry‐standard subcontract conditions, nor is it the one preferred by subcontractors. Furthermore, this method places considerable risks on the main contractor due to the possibilities of under‐recovery and the creation of secondary risks. This method, indeed all the methods that were encountered, seems to be the result of a rather uneasy compromise between the parties, the outcome of which may be related to their relative bargaining power.

Details

Journal of Financial Management of Property and Construction, vol. 10 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

Article
Publication date: 17 July 2007

M.M. Tuuli, B.K. Baiden and E. Badu

The enforcement of liquidated and ascertained damages (LADs) can be problematic when the amounts are poorly assessed and there are lapses in the administration of contracts. This…

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Abstract

Purpose

The enforcement of liquidated and ascertained damages (LADs) can be problematic when the amounts are poorly assessed and there are lapses in the administration of contracts. This paper seeks to investigate the relevance of LAD clauses in construction contracts in Ghana, as well as the methods employed in their assessment and enforcement.

Design/methodology/approach

A parallel survey method was adopted. Three sets of similar questionnaires (slightly modified) were administered to professionals in client, consultant and contractor organisations in contract administration roles, to explore their experiences in the assessment and enforcement of LADs.

Findings

LADs are not serving their purpose in construction contracts in Ghana. Clients have created situations that render LADs unenforceable. LAD amounts are also not genuine pre‐estimates of expected loss to be incurred, as assumptions and guesses rather than genuine calculations on a case‐by‐case basis are adopted in their assessment.

Originality/value

This research indicates that the enforcement of LADs can be enhanced if clients become more diligent in their contractual, mostly financial, obligations. Since a purposive sampling procedure was adopted, the findings and conclusions of this research are only tentative, but nevertheless raise serious issues regarding contract administration practices in Ghana.

Details

Structural Survey, vol. 25 no. 3/4
Type: Research Article
ISSN: 0263-080X

Keywords

Article
Publication date: 1 March 2016

Olga Smirnova, Juita-Elena (Wie) Yusuf and Suzanne Leland

Public agencies contract out to pursue a variety of goals. But, these goals cannot be realized if the performance of contractors is not assessed and monitored. This study examines…

Abstract

Public agencies contract out to pursue a variety of goals. But, these goals cannot be realized if the performance of contractors is not assessed and monitored. This study examines the state of performance measurement and contract monitoring in the U.S. transit agencies. We focus on three research questions: (1) What monitoring capacity exists within transit agencies? (2) What monitoring methods are used by transit agencies? (3) What performance measures are tracked by transit agencies? We find monitoring units are common in a third of agencies in the study. Service and customer complaints are the most common performance measures, while penalties and liquidated damages are the most frequent form of penalties. Finally, we find that transit agencies utilize a variety of output and outcome measures to monitor contractors.

Details

Journal of Public Procurement, vol. 16 no. 2
Type: Research Article
ISSN: 1535-0118

Case study
Publication date: 2 April 2018

Akhileshwar Pathak

The Supreme Court judgement, Kailash Nath Associates v. Delhi Development Authority consolidates the law on award of liquidated damages and stipulations on penalties. Contractual…

Abstract

The Supreme Court judgement, Kailash Nath Associates v. Delhi Development Authority consolidates the law on award of liquidated damages and stipulations on penalties. Contractual damages are to cover losses and not to profit from or penalise the party in breach. Stipulated amounts in damages or penalties are appraised by the courts and only a reasonable compensation is given. Earnest money, and its forfeiture, stood distinct. It could be forfeited without appraisal. The case integrates the different categories and re-states the principles for award of damages.

Details

Indian Institute of Management Ahmedabad, vol. no.
Type: Case Study
ISSN: 2633-3260
Published by: Indian Institute of Management Ahmedabad

Keywords

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