FIDIC / Legal Reference: FIDIC Red Book Clause 8.7
A pre-agreed sum payable by the contractor to the employer for each day by which the contractor overruns the Date for Completion. Delay Damages are the employer’s primary remedy for late completion and are expressed as a daily or weekly rate set out in the Appendix to Tender.
What it means in practice
Clause 8.7 entitles the employer to deduct Delay Damages from amounts due to the contractor once the Date for Completion has been passed without a Taking Over Certificate being issued. The daily rate is intended to represent a genuine pre-estimate of the employer’s loss from late completion.
Delay Damages are a liquidated sum — they accrue automatically without the employer needing to prove actual loss. Once the Taking Over Certificate is issued, Delay Damages cease to accrue even if the Works are not fully complete.
Where disputes arise
Contractors frequently challenge Delay Damages on the grounds that the rate is a penalty rather than a genuine pre-estimate of loss, that time has been put at large by employer prevention, or that extensions of time should have been granted. The Cavendish test applies in English law; UAE courts have discretion to adjust excessive rates under Civil Code Article 390.
UAE Context
The UAE Civil Code takes a different approach to penalties than English law. Article 390 allows UAE courts to adjust a penalty clause that is excessive — giving UAE-seated courts a discretion that English courts lack. This distinction can significantly affect Delay Damages disputes.
Related terms
Whether you are pursuing or defending a Delay Damages claim, e-Basel provides expert analysis of entitlement, quantum, and enforcement options in UAE construction disputes.
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