Extensions of time and liquidated damages in construction contracts in England and Wales

The purpose of this paper is to examine the relationship between extensions of time and payment of liquidated damages under construction contracts in English law. This paper sets out the law relating to granting extensions of time and liquidated damages and examines the effect of one upon the other. The JCT form of contract is used as an example, although it is submitted that the position is the same under other forms of contract. Case law is examined to illuminate the judicial approach and highlight inconsistencies, and consideration is given to the position in other jurisdictions. This paper examines the effect of delaying events in particular circumstances, including where time is “at large”, sectional completion, partial possession, set-off of liquidated damages and liquidated damages after termination of the contract. Particular attention is paid to concurrent and sequential delays; where both parties are at fault, it may be appropriate to deny the employer any entitlement to liquidated damages and deny the contractor any entitlement to loss and expense. An understanding of the effect that delaying events have upon the contractor's right to an extension of time and the employer's entitlement to liquidated damages is critical for successful project completion. This relationship is not always straightforward and judicial approach is not always consistent. Clarification is required as to the effect of sequential delays. This paper is of value to researchers and practitioners in establishing the legal position in an area that is often complex and obscure.