Liquidated damages - the necessary notices

I was recently reminded of the notice requirements under JCT 2011 (both traditional and design and build) in order for an employer to withhold or deduct liquidated damages.

The provisions are detailed and there are possible pitfalls for the unwary.

  • A non completion certificate must have been issued (notice 1).
  • Before the Final Certificate, the employer must have notified the contractor that it may require payment of or may withhold or deduct liquidated damages (notice 2).

So far so good, but after that the provisions are unclear. They suggest that provided the two notices mentioned above have been given then the employer can give what would appear to be a further notice to the contractor effectively repeating notice 2. This is confusing. It may be that notice 2 will suffice but a prudent employer may chose to serve two notices in the same form.

Lastly if the employer wants to withhold or deduct liquidated damages, it will also need to serve a Pay Less Notice.

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