Costruction Contracts Essay Example | Topics and Well Written Essays - 2250 words

Costruction Contracts - Essay Example It is observed that the building projects are seldom completes on the given time due to one reason or the other. Reasons of the delay might be a) delay on the part of contractor b) suspension of work c) non payment to contractor in time and the d) circumstances beyond the control of stakeholders. The contractor as per the agreement, bound to complete the task within the given timeframe. If work is not done within the allocated time, the contractor is obliged to compensate the losses suffered by the employer. In the scenario No.1 where an old cellar was discovered by the Cash ( the contractor) on site which was not identified by Woolley Wilson Developments (WWD)( the employer ) hence, caused extra time and expenses to the contractor, which should be born by the employer. In the scenario No. 2 the contractor had to call in British Gas Company to reposition the main gas pipeline which took near about sixteen days to get the job done, caused a delay of 16 days in the accomplishment of pr oject, therefore, bound to pay compensation to the above said employer. The competent court of law or the arbitrator as the case may be, shall determine the compensatory amount payable to the affected stakeholder keeping in mind the actual losses. Further, the competent jurisdiction or the arbitrator empowers either to increase or to decrease the compensatory amount provided substantial violations of the contract were found. According to UK law, unliquidated damages are determined by the competent court of law provided the loss is proved by the petitioner. Only then claimant shall be entitled for compensation. In the case of Surrey CC v Bredero Homes (1993)2, it was held by the court that damages were not merely awarded on failure of compliance but to the loss suffered. Contrary to that, in the case of Chaplin v Hicks (1911)3, the court of law awarded compensation to the claimant. It transpired from the said judgments that the court even considers those claims where monetary losses are not occurred. In accordance with law, damages are analyzed in order to place the claimant in the same position where they were, if they performed as per the agreed terms. Now the question is how to quantify the damages occurred for the expected losses. Here we found two options to handle the issue a) reason of non performance and b) remedial measures to mitigate the losses. We may refer the cases of Radford v De Froberville (1977)4 and Tito v Waddell (no 2) (1977)5. In referred cases, the court had the diversion views as far as compensation for the damages are concerned. In other words, court of law while deciding the cases of compensation assessed the damages first. Under English law, damages are categorized in two ways a) liquidated damages and b) unqualified damages. As per civil code of conduct, liquidated damages are taken as penalty. In the mentioned situation, liquidated damages clause, if inserted in the contract, is applicable. Breach of a contract attracts compensation under liquidated damages. Provided a) either uncertain or difficult to quantify b) amount of compensation based on actual losses c) adequate remedy e) planted damages. If aforesaid criterions are not fulfilled, liquidated damages clause in the contract has no potential value. Penalty has nothing to do with the