A Comparative Analysis between the Application of Liquidated Damages Under English Law and UAE Law
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Delay is one of the most common breaches in the construction field, and, over the years, construction professionals have come accustomed to remedy this breach through the application of liquidated damages. This dissertation studies the concept of liquidated damages under two different legal systems: the English Common Law and the UAE Civil Law. The research methodology adopted is analytically comparative focusing on the practical applicability of the concept within each legal system where the findings are highly based on legal cases from both legislative systems. Other concepts that directly affect the application of liquidated damages (such as: Time for Completion, Extension of Time, Act of Prevention, and Sectional Completion) are also studied thoroughly in this dissertation in a way that identifies the contractual link between the term in study and liquidated damages, as well as analyses the basis of these contractual links. Both systems agree on the essence of liquidated damages being an agreed pre-estimate of the damage that the employer could potentially suffer from due to the contractor’s delay; and so, both systems will not allow the application of liquidated damages if the courts find out that the sum applied is intended to penalize the contractor rather than compensate the employer for his loss. While the English Law is clear on the non-requirement of proving the loss suffered in order to apply liquidated damages, the UAE Law takes the same position only with public contracts. For private contracts, the UAE Courts have repeatedly required for the loss to actually occur, the contract’s default to be present, and the contractor’s default must be the cause of the provided loss. In general, both legislations also agree on the application of liquidated damages on the main contractor when the delay is due to a nominated subcontractor’s default. On a different note, if the liquidated damages were found by the English courts to be so extravagant that it imposes a penalty on the contractor, the courts will nullify the clause and suffice with only rendering it inoperable. The English courts have refrained from modifying the parties’ contracts with reference to the principle of Autonomy. However, as the UAE law gives the courts the power to change contracts and the judges, though not often, will use it if necessary. This research also goes briefly into the means of estimating the liquidated damages amount, its recovery, and ways of avoiding its application.