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The Cabinet Committee of Economic Affairs (CCEA) today revised Clause 9 on Provision of Liquidated Damages (LDs)/Consequential Damages (CDs) and Incentive/Bonus in project contracts. In case of delay in completion of the contract, liquidated damages (LDs) is levied at the rate of ½ per cent of the contract price per week of delay, subject to a maximum of 10 per cent of the contract price. Notwithstanding anything expressed or implied in the contract, the contractor shall be liable to pay to the other (i) for any loss of profit, business, contracts or revenues (ii) for failure to achieve anticipated savings in costs or expenses and (iii) for any special, indirect or consequential damage of any nature whatsoever.
For early completion of the contract before the stipulated date of completion or an incentive amount at the rate of ½ per cent of the contract price per week of early completion, subject to a maximum of 10 per cent of the contract price may be paid to the contractor. The incentive would be applicable in cases where completion of work before the schedule leads to tangible benefits or benefits envisaged in the contract document (profit, services, linkages, business, contract or savings) on its completion as per schedule.
Revised Clause 9 will ensure timely implementation of project. The contract documents would become more transparent and would be based on the principles of equity between the client and the contractor leading to harmonious relations between them and reduction in contractual litigations.
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