Does a contract that specifies a rate of "NIL
DOLLARS ($00.00) per day" for liquidated damages exclude the
principal's right to claim from the contractor both liquidated
and unliquidated damages?
The parties to a conventional construction contract completed
the annexure to the contract and inserted the words "NIL
DOLLARS ($00.00) per day" in specifying the rate for
The project was delayed and the principal sought to recover
unliquidated damages for the contractor's delay. The contractor
contended that the contract operated to exclude entirely any
liability of the contractor for damages for delay.
The court held that on the proper construction of the contract
the provision did not exclude the principal's right to claim
from the contractor unliquidated damages for failing to complete
the works by the Date for Practical Completion.
The earlier case of Silent Vector Pty Ltd t/as Sizer
Builders v Squarcini  WASC 246 considered the effect of
"N/A" being inserted into an annexure of a contract
beside the item titled "Liquidated Damages per day". It
was held that the principal was entitled to unliquidated damages
for delay on the basis that there was nothing in the parties'
contractual arrangements to indicate that they intended no damages
to be recoverable for delay.
It therefore appears that an annexure completed with either
"N/A" or "Nil Dollars" as the rate for
liquidated damages will, of itself, be insufficient to operate as a
limitation on liability for unliquidated damages for delay.
Practically, if the intention is to exclude liability for both
liquidated and unliquidated damages, the best solution may be to
have the contract provide for a liability to pay liquidated damages
in a nominal positive amount, for example $10 per week, bearing in
mind that by definition liquidated damages will operate as a
limitation on liability for damages for delay. Alternatively, the
contract could include an express and clear statement that no
damages whatsoever are payable by the contractor for delay.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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