Musings of a busy mind

It has become a truism that liquidated damages are enforceable, and will not offend the rule against penalties, if they represent a genuine pre-estimate of loss undertaken at the time the contract is entered into.

That position was modified significantly last month by the Court of Appeal.


If a contract is terminated, and the project is in delay, how do liquidated damages work? If the contract has come to an end, the traditional view is that the owner's entitlement to liquidated damages falls away, and potentially greater general damages will become payable from termination.

A recent UK Court of Appeal decision considered whether or not a software development company which had failed to deliver the required software to a Thai state-owned oil and gas company was liable for liquidated damages for delay, notwithstanding that it's contract had been terminated before the due date for delivery.