When to Claim Delay Damages

Hello and welcome to this week's Blog, which will focus on the circumstances when an employer can claim delay damages from a contractor. As discussed in our previous Blog on Liquidated Damages, which are intended, the employer does not need to prove the loss. However, in such circumstances that a liquidated damages clause does not exist, the employer can still claim damages, albeit they must prove their loss.

The law of damages exists to restore the 'injured' party, in this case, the employer, to the situation they would have been in if the other party had not caused a delay. However, to claim damages, the employer must be able to demonstrate the following:

· That an agreement between the parties excites, this would be the contract and could be verbal or written; check out the previous Blog on contract formation.

· The performance obligation stipulates a completion date which has been breached.

· The amount of loss suffered as a result of the breach and not by another set of circumstances which occurred at the same time as the breach.

· That the circumstances of the loss were reasonably foreseeable as a result of the breach loss

Certain events will be accessible for the employer to prove the loss, such as when an employer has engaged a contractor to build a house and agreed to rent the home to a 3rd party on a date past the completion date for the contractor. Where the contractor is late, the employer could claim damages showing the loss of the rental income either for the delayed period or until another tenant can be found. However, in this context, should the delay occur because work was stopped due to an unexploded bomb being found in the vicinity? The employer would not be able to claim damages from the contractor as it's unlikely the tenant would have been able to enter the property with an unexploded bomb even if the contract had been completed.

When faced with the prospect of delay damages, it can be daunting for a contractor and can feel like you have nowhere to turn. Likewise, an employer may feel guilty about applying delay damages. If you wish to discuss how Velocity Dispute Management can support with liquidated damages you or discuss this Blog's content, please get in touch with admin@velocitydisputemanagemet.co.uk or book a strategic review meeting where one of our consultants will review your situation and create an action plan to utilise your rights in law to resolve the problem.

The content of this Blog is intended for information only and is not an alternative to legal advice. Velocity Dispute Management accepts no responsibility for the actions of another party as a result of this Blog or the content of any third-party source to which this Blog refers.