„EDNESDAY, JULY 19, 1978
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CALCULATION OF LIQUIDATED DAMAGES
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ALTERNATIVE METHODS OF CALCULATING LIQUIDATED DAMAGES FOR MAJOR CONTRACTS ARE CURRENTLY UNDER REVIEW BY THE STANDING COMMITTEE ON ARCHITECTURAL AND CIVIL ENGINEERING CONDITIONS OF CONTRACT, THE HON. DAVID MCDONALD, DIRECTOR OF PUBLIC WORKS, TOL: THE LEGISLATIVE COUNCIL TODAY.
WHEN FINALISED, HE SAID, THE NEW METHODS WOULD REPRESENT MORE ACCURATE PRE-ESTIMATES' OF DAMAGES UNDER CURRENT CONTRACT VALUES AND CONTRACT PERIODS.
IN REPLY TO A QUESTION BY THE HON. T.S. LO, HE ADMITTED THAT THE LIQUIDATED DAMAGES OF $6,000 A DAY INCLUDED IN THE TUEN PUN ROAD STAGE 1 CONTRACT, FIXED UNDER THE PRESENTLY EMPLOYED METHOD OF CALCULATING LIQUIDATED DAMAGES, DID NOT REFLECT THE DAILY VALUE OF THE ROAD TO THE COMMUNITY.
THIS METHOD, HE ADDED, WAS WORKED CUT IN THE EARLY 1960'S AND ALTHOUGH IT WAS STILL SATISFACTORY IN MANY CASES TODAY IT WAS NOT WELL SUITED FOR A NUMBER OF THE VERY EXTENSIVE CONTRACTS NOW FEING LET SUCH AS TUEN MUN ROAD STAGE 11.
HOWEVER, MR. MCDONALD STRESSED: +OVER-ASSESSMENT OF LIQUIDATED SUMS COULD HAVE AND PROBABLY WOULD HAVE EFFECTS CTHER THAN THAT INTENDED, E.G. CONTRACTORS MIGHT TEND TO INCREASE THE IR TENDER RATES TO COVER THEMSELVES IN CASE OF OVER-RUN OF CONTRACT PERIODS THEREBY INCREASING THE OVERALL COST OF PROJECTS OR THEY MIGHT DISPUTE CLAIMS FOR DAMAGES ON THE BASIS THAT THE FIXED SUMS ARE PENALTIES AND NOT LIQUIDATED DAMAGES AND SO ARE NOT ENFORCEABLE.
+THE SOLUTION THEREFORE IS TO ADOPT FORMULAE WHICH PRODUCE GENUINE ESTIMATES OF DAMAGES AND SO ARE BOTH EQUITABLE AND ENFORCEABLE.+
IN REPLY TO ANOTHER QUESTION, HE POINTED OUT THAT A LIQUIDATED DAMAGES CLAUSE IN A CONTRACT WAS NOT DESIGNED AS AN INCENTIVE TO COMPLETE THE WORKS ON TIME.
+SUCH A CLAUSE PROVIDES FOR A FIXED OR AGREED SUM TO BE PAID AS DAMAGES FOR SOME BREACH OF CONTRACT AND A TYPICAL CLAUSE ALLOWS FOR THE DEDUCTION OF A FIXED SUM PER DAY FOR THE NUMBER OF DAYS OVER THE CONTRACT PERIODS OR EXTENDED CONTRACT PERIOD DURING WHICH THE WORKS ARE UNCOMPLETED,+ HE SAID.
+THEREFORE IN SUCH A CASE THE INTENTION IS TO COVER THE LOSS INCURRED BY LATE COMPLETION. +
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