Johor Coastal Development Sdn. Bhd V Costrajaya Case Study

Pages: 5 (1176 words) Published: November 8, 2015

Delays of the project may lead the employer to suffer in hardship, expense, or loss of revenue. Thus, the employer may claim against the contractor a delay to the works or a defect in the works. In this case, when delays occur, the employer may have the right to claim the LAD to recover his losses such as the loss of income, the cost of alternate facilities, increased financing cost, extended overhead costs, and loss profits. Normally these claims would make under the LAD clause to reimbursement of actual damages because these costs are difficult to measure. Liquidated and Ascertained Damages
LAD is predetermined prior to the execution of the contract. The exact amount of the LAD is specified in the contract. It is a sum of money...

Bhd. v Costrajaya Sdn. Bhd. (2009) 4 CLJ 569, the court derived the principle that the LAD clause, which contains ambiguities and uncertain variables could not be challenged in the court. As the summary, it can be seen that the court will apply its fairness for matters which damages can be...

There are two ways the contractor may challenge the assessment of the LAD clause by the employer. First, the contractor may attack the propriety of the assessment by disclaiming responsibility for the delay. The contractor must show that the delays to the project were excusable delays or it is concurrent delays. Therefore, the contractor only can be granted relief from the assessment of the LAD. Second, the contractor may claim that the specified amount of the LAD is excessive and, consequently acts as more of a penalty than a damages compensation. According to the construction Contract Law in the United States, the penalties in a construction Contract are not enforceable. If it is found that the amount specified was too high, it may be judges as a penalty and not a LAD. Thus, the LAD clause would not be enforceable. In this case, when the contractor challenges the amount of LAD, the employer must substantiate the validity of the damages. And also shows that the amount of the LAD during the time it was prepared was...
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