Do liquidated damages continue to accrue after the contractor's employment is terminated?
Ordinarily, no. Subject to the wording, liquidated damages accrue for culpable delay up to termination. Loss caused by delay after termination is then addressed through general damages rather than continued accrual of the agreed rate.
Subject to the clause, liquidated damages ordinarily stop accruing on termination and general damages govern the later period
Termination does not extinguish accrued liquidated damages. Calculate them from the operative completion date to termination, subject to extensions, notices and caps. For the period after termination, the employer must prove loss caused by the contractor's breach, including reasonable completion consequences, while accounting for its own replacement strategy and mitigation. The exact clause can alter the analysis and must be construed.
| Issue | Position |
|---|---|
| Before termination | Accrued liquidated damages ordinarily remain recoverable |
| Termination date | Usual dividing point between remedies |
| After termination | General damages ordinarily require proof |
| Replacement works | Causation and mitigation must be established |
| Contract wording | May define a different stopping event or remedial allocation |
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