Liquidated damages, service credits and the s.74 record

LIQUIDATED DAMAGES AND SERVICE CREDITS

1. Delay liquidated damages. If the Supplier fails to achieve a Milestone by its Scheduled Date, it shall pay the Customer liquidated damages at [0.5]% of the Charges attributable to that Milestone for each completed week of delay or part of a week, subject to a maximum of [Maximum delay damages (% of milestone Charges)]% of the Charges attributable to that Milestone. The Customer may deduct liquidated damages from any amount payable under clause [6.10(c)].

2. The record required by s.74. The Parties record that: (a) the loss which the Customer would suffer from a delay of the kind contemplated by paragraph 1 is difficult to ascertain with precision at the date of this Agreement; (b) the rate in paragraph 1 was arrived at after discussion between them by reference to [the Customer’s standing cost of the facility, the cost of interim arrangements and the cost of deferred revenue], particulars of which are set out in Part 4 of Schedule [Schedule number: damages calculation particulars]; (c) the rate is a genuine pre-estimate of that loss and is not a penalty; and (d) each Party has taken independent advice. Drafting note: under s.74 of the Indian Contract Act 1872 the stipulated sum is a ceiling and the claimant must still establish that it is reasonable compensation, as the Supreme Court held in Kailash Nath Associates v Delhi Development Authority. A recital of the kind in this paragraph does not conclude the question but is the evidence the tribunal will look for, and it must be true. Keep the working papers.