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Liquidated damages, termination and the scope of a limitation clause

Building Law Monthly

Liquidated damages, termination and the scope of a limitation clause

In Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29, the Supreme Court held, as a matter of construction of the liquidated damages clause in the contract between the parties, that liquidated damages were payable under the clause until the time at which the contract between the parties was terminated. This right to recover liquidated damages up to the point at which the contract was terminated was held not to be defeated by the fact that the contract was terminated prior to the handing over of the works by the contractor so that the contractor never in fact completed the works in respect of which liquidated damages were payable. This construction was held to be consistent with commercial reality and the accepted functions of liquidated damages clauses. More difficult was the meaning of the word “negligence” in a limitation clause. Here the majority concluded that it was to be given its ordinary meaning and so included both the free-standing tort of negligence and the breach of a contractual obligation to exercise reasonable skill and care in the performance of the contract. Finally, it was held that the cap on liability to be found in the limitation clause encompassed within its scope the claim for liquidated damages as well as the claim for general damages.

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