Imagine this: a contractor undertakes to perform certain works by a specified date, and agrees to pay liquidated damages (LDs) if it does not complete by that date (subject to any entitlement to an extension of time). The contractor, through its own fault, is late and does not complete by the specified date. In fact, the contractor is very late and, in the end, the employer terminates the contract before the works are completed (as it is entitled to do under the contract).
For those of us involved in the construction industry, this scenario does not require too much imagination.
In my previous blog post, I said that whether LDs could be recovered after termination of the contract would appear on my hypothetical construction law exam paper. I was concerned about how and whether the unlucky student sitting this exam question would get to the right answer.
It turns out that there was a more fundamental problem – I asked the wrong question. The recent Court of Appeal decision in Triple Point Technology Technology Inc v PTT Public Co Ltd shows that I should have asked whether LDs are recoverable at all in the event of termination. Continue reading