Liquidated Damages for Delayed Contractual Performance

July 21st, 2021

In Triple Point Technology v PTT (2021) UKSC 29 the Supreme Court considers general issues about a provision for liquidated damages under a contract and the function of liquidated damages. Parties agree a liquidated damages clause so as to provide a remedy that is predictable and certain for a particular event. There then does not have to be a potentially difficult and time consuming quantification of loss.

The general law is that the accrual of liquidated damages comes to an end on the termination of the contract. After that the contract is at an end and damages for breach of contract must be sought under the general law. Parties do not have to provide specifically for the effect of the termination on their contract.

Whether the purpose of a particular liquidated damages clause is limited to liquidated damages for delay in completion or whether it liquidates damages for failure to complete at all turns on the wording and interpretation of the particular clause.

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