SECTIONAL COMPLETION PROVISIONS DO NOT AMOUNT TO A PENALTY

Liberty Mercian Ltd v Dean & Dyball Construction Ltd [2008] EWHC 2617 (TCC), [2009] BLR 29

In Liberty Mercian Ltd v Dean & Dyball Construction Ltd [2008] EWHC 2617 (TCC), [2009] BLR 29 Mr Justice Coulson held that the liquidated and ascertained damages stipulated to be payable in a clause dealing with sectional completion arrangements of a construction project did not amount to a penalty clause and so were enforceable. The parties were aware of the fact that the work was to be carried out sequentially and that the work on one section could not be started until work on the previous section had been completed. The sums stipulated were not intended as a punish - ment but as a genuine pre-estimate of the loss likely to be suffered and so the provision did not amount to a penalty.