Contact: Patrick Mead; Carter Newell (Queensland, Australia)
In the first of the March 2014 editions of Constructive Notes, the writer observed that oftentimes exclusion of liability clauses and liability caps are mechanisms which operate in tandem with provisions in relation to Liquidated Damages (which are not considered to be exclusory, operating in theory for the benefit of both parties to the contract) to create a finely balanced risk regime.
It was further noted that other than in respect of a provision for Liquidated Damages (which was likely to be capped as a percentage of the Contract Sum), the contractor may insist upon a complete exclusion of damages for loss of profit, loss or use or business interruption, or alternatively seek to cap any such exposure to the limit of any applicable insurances.
A question can then arise as to whether the remedy of Liquidated Damages is the Principal's sole remedy for delay, however caused, or whether there is scope to argue for an entitlement to further damages (leaving to one side the efficacy of the consequential loss exclusion) on the basis that defective design (where this is the responsibility of the contractor) or workmanship which caused or contributed to the delay constitute a separate and discrete breach of contract.
To read the full article, click here.
