Cases - Temloc Ltd v Errill Properties

Record details

Name

Temloc Ltd v Errill Properties

Date

[1987]

Citation

39 BLR 30, CA

Keywords

Construction contracts - liquidated damages - delayed completion - nil sum entered as liquidated damages provision in jct standard form of building contract - evidence that nil sum entered as bonus to incentivise timely completion - whether liquidated damages payable - whether unliquidated damages payable

Summary

In this case, which concerned the development of a shopping centre in Plymouth pursuant to the JCT Standard Form of Building Contract (1980 edition), the parties had entered '£nil' in the liquidated damages section against clause 24.2 of the appendix of the JCT form. The Court of Appeal held that, on a proper construction of the contract, no damages would be recoverable for delayed completion (be they liquidated or unliquidated) applying the principles in Cellulose Acetate Silk Company Ltd v Widnes Foundry (1925) Ltd [1933], and providing that neither liquidated nor unliquidated damages could be deducted:

'I think it clear, both as a matter of construction and as one of common sense, that if (1) clause 24 is incorporated in the contract and (2) the parties complete the relevant part of the appendix, either by stating a rate at which the sum is to be calculated or, as here, by stating that the sum is to be nil, then that constitutes an exhaustive agreement as to the damages which are, or are not, to be payable by the contractor in the event of his failure to complete the works on time.'

While this decision is possibly surprising, it is possibly explicable on the evidence, during which the employer conceded that the sum '£nil' was entered as a 'bonus' in order to incentivise timely completion.

One has to interpret the contract objectively to find the true intentions of the parties. If the intentions of the parties are clearly that unliquidated damages should apply, then the entry of 'NIL' against the liquidated damages provision will not defeat that interpretation.