LIQUIDATED DAMAGES

Southies

Liquidated damages are intended to be a genuine pre-estimate of the damages to another party for an event not occurring - in this case the completion of the house.

It is intended as a compensation to the person being "injured" rather than as a penalty against the person breaching the agreement...penalty clauses in contracts are illegal in Australia. Basically you can't increase the amount of liquidated damages too high otherwise they are judged as providing too much benefit to the injured party...and won't be upheld.

The other point about liquidated damages is that to be upheld they must be uncertain at the time of making the contract. By offering you rent assistance they are taking out that part that could arguably be determined up front.

A general comment..... $75 per week (5 working days) is a pitiful amount particularly if you have other expenses associated with temporary accommodation, such as moving expenses, storage expenses, or other. However, estimating these is problematic.....and you'll hit resistance with the builder.

Generally the liquidated damages amount is a standard amount provided by the States housing industry...but there should be an estimate behind that.

When I built my Building Surveyor was able to provide a justification to getting up to $150 per week...I think the final compromise figure was $125 per week.

I'd suggest if you have a building surveyor get them to look at the liquidated damages clause and a solicitor to cast an eye over the rental clause...make sure it's in the contract and not part of some promotional literature with no contract basis. There may be others who have sought this legal advice and may wish to share.

I'm not a lawyer but have been involved in civil engineering contracts with liquidated damages clauses....I offer this advice just as general guidance.

Ensuring my backside is well protected.....

My pleasure....hope they write some sufficiently confusing fine print for the builder....