In construction, time is money. Every building contract, whether for houses, roads, bridges, or oil and gas plants, has an agreed completion date. When a contractor fails to meet that date, the client loses income, pays extra rent, or incurs more consultant fees. Liquidated and Ascertained Damages (L&AD) is how that loss is calculated and claimed.
What is L&AD?
It is a sum of money agreed before the project starts and written into the Contract Bill of Quantities. It is usually expressed as a fixed rate — e.g., N50,000 per week or per day of delay. Once both parties sign, both are bound by it.
If the contract states “Nil” for L&AD, the client cannot claim any damages at all for late completion — as decided in Temloc v. Errill.
L&AD must be reasonable. If the rate is excessively high, the court will treat it as a Penalty and will not enforce it.
When Can You Claim L&AD?
You can only claim when these 4 conditions are met:
- The contractor actually failed to complete by the completion date.
- The Architect/Engineer has considered all claims for Extension of Time.
- A Non-Completion Certificate has been issued.
- The employer has given notice to the contractor that he intends to deduct or claim L&AD — usually a first general notice, then a second notice stating the exact amount and period.
Important: Failure to deduct it immediately does not mean you have waived it. The employer can still recover it as a debt up to Final Certificate stage.
What if the Employer Caused the Delay?
This is where “Time at Large” comes in. If the employer causes delay and there is no Extension of Time clause, or the clause exists but was not used, the fixed completion date falls away. The contractor then only has to complete within a “reasonable time” — and the employer cannot claim L&AD.
How is it Calculated?
It is not guesswork. The Project Administrator uses the agreed construction programme — Short-term (weekly), Medium-term (monthly), and Long-term (contract duration) — to prove delay. The Quantity Surveyor then calculates the cost using the rates already in the Bill of Quantities.
Example: A 48-week contract for N12,000,000 suffers a 4-week overrun costing the client N2,000,000 in extra costs. That N2,000,000 must be agreed by both parties before it is deducted from the contractor’s payment or added to the contract sum via an Extension Certificate.
What About the Reverse?
If the employer breaches the contract — for example by delaying site handover or payment — the contractor can claim the opposite: Loss and Expense. The principle is the same, but the payment goes from client to contractor.
Bottom line: L&AD is not a punishment. It is a pre-agreed, transparent way to manage the risk of delay. Agree a fair rate, follow the notice procedure, and keep your programme updated — it will save both parties from a long court battle.