Page 49 - ARCHITECTURE SITE PRACTICE

EXTENSION OF TIME AND
LIQUIDATED ASCERTAINED

DAMAGE (LAD)

The Liquidated Ascertained Damages (LAD) clause is an
important part of a construction contract. It's designed to
cover any predicted losses which might occur as a result of a
project overrunning or being delayed The Liquidated
ascertained damage (LAD) clause is an important part of a
construction contract. It's designed to cover any predicted
losses which might occur as a result of a project overrunning
or being delayed.

An important thing to remember is that LAD is not a
financial penalty and neither is it implemented as a
punishment for a breach of construction contracts.

It’s actually a pre-agreed part of the contract itself between
an employer and contractor. Now, it’s fair to say that delays
can sometimes occur in construction projects.

It might be that there's a sourcing problem with some key
materials. Perhaps there was an accident in construction
that delays the entire process. These hings do happen.

How LAD Applies

LAD is not an automatic and legally required part of all
construction contracts. Although, thankfully in standard
contract law, it is almost always included. If you’re buying a
new development property in Malaysia, then the likelihood is
that a LAD clause will appear in the Sale and Purchase
Agreement (SPA).

Claiming LAD should be a fairly simple process. If a project
runs beyond the agreed completion date before possession is
given, then the clause is triggered. A letter of demand to the
developer stating the clause and agreed LAD rate should
then result in the employer receiving payment.

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