A liquidated damages clause in a building contract may be a penalty where, at the time of contracting, the principal had not taken steps to satisfy a separate condition upon which receipt of the financial benefit (here, sale proceeds) depended, such that delay in the contractor's performance was incapable of causing the loss the clause purported to estimate. An express clause in an extension of time provision stating that delay by the principal shall not cause the date for practical completion to be set at large is effective to prevent the prevention principle from operating. Clause 42.9 of AS2124-1986 (interest on overdue payments) applies only to liquidated sums and not to claims for unliquidated damages.
The full text is available to signed-in members, including the 29 later cases that cite this judgment.
4 of the 29 citing cases carry a classified treatment. How each court treated it is available to signed-in members.