In order to claim liquidated damages, the Contract requires the employer to issue a notice of non-completion if the contractor has not completed the works (or a section) by the completion date stated in the contract (subject to any extension of time awarded). This is a pre-requisite to claiming liquidated damages.
When can you get liquidated damages?
Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. These damages are paid out in the case of a breach of contract, and are pre-estimated and spelled out in advance when the contract is signed.
How do you account for liquidated damages?
Liquidated damages is deducted from any money due or which may become due the contractor under the contract or collect such liquidated damages from the retention money or other securities posted by the contractor, or a combination thereof, whichever is convenient to the Procuring Entity.
What is an example of liquidated damages?
A liquidated damages example would be a contractor that failed to complete a construction project on time and is charged daily until the project has been finished.