Liquidated damages can quickly cripple the profitability of your job and sour a commercial relationship. But, it can also be a powerful commercial tool which provides certainty for both parties to the contract.

In this guide we’re going to show you:

• What liquidated damages are;

• Why liquidated damages clauses are commonplace in construction contracts;

• An example liquidated damages clause;

• An explanation of the five key elements that influence when liquidated damages apply;

• The circumstances in which liquidated damages might be considered an unenforceable penalty;

• Strategies for trying to negotiate a liquidated damages clause; and

• The intersection between extensions of time and liquidated damages.

By the end, you’ll have a thorough understanding of how to navigate the liquidated damages clause in your next contract, from negotiation through to project completion.