Liquidated Damages, Delay and the Termination of Contracts

摘要

Can a liquidated damages clause which makes provision for the payment of damages in the event of delay in the completion of a project apply where the contract between the parties has been terminated as a result of the employer's acceptance of the contractor's repudiatory breach of contract and completion of the project either has not been achieved or has been achieved by a third party? This was one of the issues considered by the Court of Appeal in Triple Point Technology Inc v PTT Public Co Ltd. The answer of the Court of Appeal, in a judgment given by Sir Rupert Jackson, was that the employer was entitled to recover liquidated damages in respect of the works which had been completed at the time of the termination of the contract between the parties. But it could not bring a claim for liquidated damages in respect of the works which had not been completed. A claim in respect of these losses could only be brought as a claim for unliquidated damages, and any such claim would require the employer to prove the loss which it had sustained as a result of the contractor's failure to complete the works on time. The Court of Appeal reached this conclusion as a matter of interpretation of the liquidated damages clause in dispute. It did not purport to lay down a legal rule of universal application. Further, it recognised that the authorities did not speak with one voice. Indeed, one unusual feature of the case is that the issue was decided at first instance without reference to authority, and the relevant authorities were only brought before the Court of Appeal on day two of the appeal and after the conclusion of the hearing following a request from the court to counsel. In the circumstances, the judgment of Sir Rupert Jackson represents a careful and lucid analysis of the authorities and the difficulties to which they give rise. It is surprising that this issue, which is one of considerable practical significance, has been neglected to the extent that, not only are the authorities in some disarray, but the leading decision of the House of Lords on the point from the early 20th century was not even brought before the court in some recent first instance decisions where this particular point of law has arisen.