Articles from the Silver Shemmings Ash Team on contractual matters, recent case law changes and items of interest in the construction and property world

Liquidated Damages by Richard Silver

August 28, 2018 | Silver Shemmings

One reoccurring question we at Silver Shemmings Ash LLP are posed by our clients is whether the liquidated damages stipulated in the contract is enforceable when the employing party has incurred little or no loss as result of any delay in completion

A penalty clause is where the sums of money inserted into a contract are extravagant and unconscionable, and the purpose being to coerce a party to performance. A penalty clause is unenforceable, and the sum is irrecoverable

Liquidated damages, on the other hand, are enforceable provided they represent a genuine and reasonable pre-estimate of the loss likely to be incurred as a direct result of a breach (such as delay) or a lesser sum, as assessed at the time the contract was entered into. It is irrelevant if the employing party subsequently incurrs little or no loss as a result of the delay

So, where you have entered into a contract and signed in agreement to the application of a liquidated damages on late completion, but the sum stipulated can be evidenced as not being a genuine and reasonable pre-estimate at the time the contract was entered into, the liquidated damages will be unenforceable and damages will be rendered “at large” and which must be proven

Obviously, the actual loss that can be proved by the employing party will be substantially less than the liquidated damages stipulated in the contract

If you have any questions of a similar nature to this, please feel free to contact myself on or another member of the Silver Shemmings Ash team for advice

Author Richard Silver is Senior Partner at Silver Shemmings Ash. He is multi qualified as a Barrister, Solicitor & Chartered Quantity Surveyor with over 30 years of experience in the Construction Industry

Aside from his work globally as a legal advisor, his main focus is dispute resolution, encompassing the Construction, Building, Rail & Civil Engineering sectors. Having acted as Arbitrator, Adjudicator, Mediator, Lead Representative and Expert Witness on quantum, programme & planning he is widely experienced, as Lead Representative & Advocate, in all forms of Dispute Resolution

At Silver Shemmings Ash, we provide seminars and training alongside our core activities in contentious and non-contentious matters. The purpose of these is to facilitate a greater knowledge and understanding of construction and property law. There remains a considerable lack of training in such areas for companies and this is an issue which we are looking to address

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