LADs, Not Lads. The ‘Late Arrival Damages’ That Can Cost You!
Let’s get one thing straight. LADs aren’t your mates down at the pub. They don’t let you off easy when you are late.
In construction, Liquidated Ascertained Damages (LADs) are the financial consequence of missing deadlines. If a project overruns, the employer does not have to prove their losses in court. LADs are the industry’s version of late fees, and nobody likes late fees.
LADs, LDs, Delay Damages. What’s in a Name?
LADs go by many names in different parts of the industry:
🔹 Liquidated Damages (LDs): The American cousin
🔹 Delay Damages: The FIDIC version
🔹 Pre-Estimated Damages: Sounds fancier, but it is the same thing
🔹 Penalty Clause: Be careful. If LADs look like a penalty, they will not hold up in court
Whatever you call them, they all mean one thing: Delays cost money.
Where Do LADs Hide?
📌 JCT: Section 2.32 (LAD rate), Section 2.29 (EOT), Contract Particulars
📌 NEC: Option X7 (Delay Damages), Clause 51.2, Contract Data
📌 FIDIC: Sub-Clause 8.7 (Delay Damages), Sub-Clause 2.5 (Employer Notification), Appendix
📌 Bespoke Contracts: Negotiable but can be a trap
Pro Tip: Do not just look at the contract. Always check the Contract Particulars, Contract Data, or Appendix for actual figures.
When Do LADs Apply?
✅ The project misses the completion date
✅ The contract expressly includes LADs
✅ No valid EOT is granted
✅ The amount is a genuine pre-estimate of loss
But LADs CANNOT be imposed when:
🚫 The delay was caused by the employer
🚫 A valid EOT has been granted
🚫 The LAD amount is excessive and acts as a penalty
Key Legal Cases to Remember
📌 Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd (1915): Established that LADs must be a genuine pre-estimate of loss
📌 Cavendish Square Holding BV v Talal El Makdessi (2015): Reinforced that if LADs serve a legitimate commercial interest, they are enforceable
Total Liability Cap Trap
Some contracts state that LADs are separate from total liability caps, meaning you could be liable for LADs on top of capped liabilities.
Check if:
✅ LADs are capped separately or included in total liability
✅ Your contract allows LADs alongside other liabilities
Key Takeaways
✔️ LADs aren’t penalties, but if they look like one, they are unenforceable
✔️ Check if LADs are capped separately from total liability
✔️ An EOT can save you from LADs, so submit notices properly and on time
✔️ Always check Contract Particulars, Contract Data, and Appendices
Final Thought
LADs protect employers from financial loss, but if you do not understand them, they can be a contractual landmine.
Have you ever been caught out by LADs or successfully negotiated them down? Share your thoughts in the comments! 👇
