Newly published NEC4 amendments updated to reflect Court of Appeal decision on liquidated damages and termination

Newly published NEC4 amendments updated to reflect Court of Appeal decision on liquidated damages and termination

Beneficial variations to an employment contract held to be void where the principal reason is a TUPE

Last year, the Court of Appeal handed down a controversial judgment which considered the extent liquidated damages are recoverable in the event of termination of a contract (Triple Point Technology v PTT Public Company). 

The implication of this decision was that clauses which refer to liquidated damages accruing up until the completion of the works are more likely to fall away entirely upon termination. This meant that any accrued liquidated damages would no longer be payable if the contract was terminated and instead, the employer would only be entitled to a (generally less valuable) right to general damages. This was a major departure from industry understanding.

The new NEC4 amendments have recently been updated to reflect this case and clarify that the employer’s entitlement to be paid delay damages will cease at termination. After termination any further delay costs will be considered as part of the general costs/damages due as a result of the termination of the supplier’s obligation to provide the goods, works or services.

The Triple Point case is presently on appeal to the Supreme Court with the hearing this week (12 November 2020). The decision will have far-reaching implications for those in the construction industry so watch this space!

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