Civil Engineering Reference
In-Depth Information
'difficult to support as a genuine pre-estimate of the damage likely to
be suffered from delay in completion in any case. Particularly this
would be so in a case in which the building is complete at the date of
the contract and the purchaser is let into possession under the terms of
the contract.'
155
The purpose intended in this instance was to enable the claimant, among
other things, to commence the fit-out works. It is difficult to fault the
conclusion in
BFI
v.
DCB
on the facts as found by the arbitrator. The clear
words of most contracts allow liquidated damages for the period between
the date when the works should have reached completion until the date of
practical completion. Unless possession is taken by the employer strictly in
accordance with the contract terms, unlawful possession by the employer is
not a trigger for the end of liquidated damages, despite what many adjudi-
cators appear to think
156
.
3.8 Where there is no breach of contract
It seems that the question whether a sum stipulated for payment on the
happening of a particular event is a penalty or liquidated damages will be
irrelevant if the event does not constitute a breach of obligation on the part
of one of the parties. The situation has frequently arisen in connection with,
but it is not confined to, hire purchase agreements. In
Associated Distributors
Ltd
v.
Hall and Hall
157
the agreement provided that if the hirer wished, he
could determine the agreement. The owner was also entitled to determine
if the hirer was in default with payments. On determination for any reason,
the hirer must pay certain sums of money to the owners. Slesser LJ
summarised the position in this way:
'This is a case where the hirer has elected to terminate the hiring. He has
exercised an option, and the terms on which he may exercise the option
are those set out in clause 7. The question, therefore, whether these
payments constitute liquidated damages or penalty does not arise in
the present case for determination.'
158
This approach appeals as a very straightforward solution to the problem.
Lombard North Central PLC
v.
Butterworth
159
was a case dealing with hire of
computer equipment. The parties had stipulated that certain terms were to
be treated as conditions. One of these terms was that on the hirer's failure to
pay any single instalment, the owner was entitled to recover the goods
155
[1991] 1 WLR 981 at 986.
156
In
Impresa Castelli SpA
v.
Cola Holdings Ltd
(2002) CILL 1904, the employer had occupied part of the
works, but not under the partial possession clause of WCD 98. It was held that such occupation did
not amount to partial possession, there was no mechanism to reduce liquidated damages and,
therefore, the full amount of liquidated damages could be recovered.
157
[1938] 1 All ER 511, CA.
158
[1938] 1 All ER 511, CA at 513.
159
[1987] QB 527.
