How do liquidated damages work in a construction contract?
Last reviewed July 5, 2026
Liquidated damages are a set amount in the contract for each day the project runs late. This amount covers the client's loss due to delays. They apply after the completion date if the builder hasn't finished on time.
Key points
- Agreed amount for delays.
- Covers client's losses.
- Starts after the completion date.
If the project is delayed, the client can claim these liquidated damages as compensation. Having this amount clearly defined in the contract helps avoid disputes later. Keep an eye on timelines and let the super know if delays are likely.
How Alloovium helps
Alloovium can help track project deadlines and obligations to avoid liquidated damages.
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General information for Australian construction professionals — not legal advice. Verify jurisdiction-specific requirements with the relevant regulator.