DIFFERENCE BETWEEN CPWD TENDER STRUCTURE CLAUSE VS PSU/PRIVATE WORKS TENDER

CLAUSE FOR LIQUIDITY DAMAGES AND PRICE REDUCTION

BY
JAI MATEY (A13559016277)
FARAZ KHAN (A13559016278)
REWTI RAMAN DUBEY (A13559016304)
INAMUL HASSAN (A13559016315)
AMIT SINGH (A13559016357)
 INTRODUCTION
Liquidated damages are damages whose amount the parties designate during the formation of a contracts for the
injured party to collect as compensation upon a specific breach (e.g., late performance).

When damages are not predetermined/assessed in advance, then the amount recoverable is said to be 'at large' (to
be agreed or determined by a court or tribunal in the event of breach).

While a liquidated damages clause stipulates a fixed amount representing a genuine pre-estimate of damage or
loss that is likely to result from contractual breach, a penalty clause stipulates a sum in serving to deter non-
performance of the contract.

Revises the commercial catalogue price list schedule or other document upon which contract award was predicted
to reduce price.
COMPARISON CPWD V PSUs(IOCL & CIL)
 CONCEPTUAL BASIS OF LIQUIDATED DAMAGES

• In many cases, the actual damages that owner will suffer in event of late
completion is difficult to determine
• The owner & Contractor agree on a fixed daily rupee amount that is
considered reasonable measure of the extent of damage in the event of late
completion
 WHEN CAN THEY BE USED?
In supply, service, research and development, and construction contracts:
(1) The time of delivery or performance is such an important factor in the award of
the contract that the owner may reasonably expect to suffer damage if the delivery
or performance is delinquent.
(2) The extent or amount of such damage would be difficult or impossible to
ascertain or prove.
(3) The liquidated damages rate must be a reasonable forecast of just compensation for
the harm that is caused by late delivery or untimely performance.
(4) Applicable LDs clause and rates should be identified in the solicitation. Rates
should include an amount for other expected expenses associated with delayed
completion. After award, LDs can be incorporated into the contract as a
supplemental agreement, though it would be difficult to have a contractor to agree
without objection.
Types of Liquidated Damages Clauses
1. FAILURE TO COMPLETE :
Failure to complete by a specified date is the most
common breach of contract for which LD clauses are used in the construction
industry. The damages are usually expressed in Standard Forms as an amount
per day or per week of delay to completion to be paid by the Contractor to the
Purchaser.

2. FAILURE TO PAY :
Failure to pay by a certain date is a breach of contract not
usually associated with liquidated damages clauses, but such a clause could
provide for payment of interest at an increased rate for the period of delay.
EXCUSABLE DELAYS
(1) acts of God or of the public enemy,
(2) acts of the government in either its sovereign or contractual capacity, (Ex.
Untimely responses to contractor’s requests, improper inspections)
(3) fires,
(4) floods,
(5) epidemics,
(6) strikes, (contractor must show it acted reasonably)
(7) unusually severe weather.
 EXCUSABLE DELAYS
A contractor must also demonstrate that:
(1) the event was beyond the contractor's control (including that it was not
foreseeable at the time of contract signing);
(2) the contractor could not have prevented the event;
(3) the contractor could not overcome the effects of the event;
(4) no contractor fault or negligence contributed to the event; and
(5) the event caused a delay to the overall completion of the contract.
FACTORS OF COMPARISON

TIME CONTRACT
ESTIMATED VALUE

MODE OF DAMAGES
PAYMENT OCCUERED

SECURITY DEFAULT
DEPOSITED PERIOD
 COMPARISON

CPWD IOCL CIL

The recovery of liquidated damages for
delayed performance, on account of
which extension of time is granted
under clauses , is a distinct matter and
would depend on:
(i) Prior notice as understood by
Section 55 of the Contract Act,
1872
(ii) Fault/delay/hindrance being
referable to the contractor and
(iii) Proof of the loss occasioned
thereby (in case it is challenged
by the contractor before the
Arbitrator).
In the event of the contractor’s default
continuing in this respect, the liquidated
damages may be enhanced to Rs.50.00 per
day for default subject to a maximum of
ten percent of the estimated cost of the
works put to tender.
Contractor is liable to pay to the
Corporation as Liquidated Damages an
amount of Rs.1000 for each default or
materially incorrect statement.
Deductions for recovery of such
liquidated damages will be made from any
amount payable to the Contractor.
 No liquidated damages clause will be
inserted in the contracts up to Rs.
1.00 lakh and in the contracts dealing
with Eng.. Consultancy Services
 For delay in contract completion date
subject to a maximum ceiling of 10%
of contract order value.
 For a period of more than one year,
the liquidated damages will be levied
on one year's contract period value.

The contractor shall not be entitled for

any damages/compensation for stoppage
of work due to safety reasons.
 CPWD
The terms and conditions of the
contract do not permit
cancellation/reduction without the
assessment of financial outcome
which can be unexpected also.
Reduction/cancellation is by mutual
consent where the firm does not agree
to cancellation/reduction without
financial repercussion in all cases ,the
Associated Finance will be consulted
at every stage right up to the payment
of compensation.
IOCL
 The contractor committing a
default or breach of any of the
provisions of the contractors
liability pay to the corporation a
sum not exceeding Rs.50.00 as
liquidated damages for every
default, breach or furnishing,
making, submitting, filling
materially incorrect statement.
CIL
 In case of works/materials/service
contracts exceeding Rs. 1.00 lakh -
liquidated damages @ ½% of the
contract per week or part thereof for
delay in completion subject to a
maximum limit of 10% of contract value.
 In case for a period of more than one
year, the liquidated damages will be
levied on one year's contract period
value.
 CPWD
 All compensations or the other
sums of money payable by the
contractor under the terms of this
contract may be deducted from, or
paid by the sale of a sufficient part
of his security.
 Compensation to the contractor
upto a certain percentage (1.5%)
per month for delay of work.
 Work delay also to be computed
on per day basis.
IOCL
Failure to comply with model Rules
for labor Welfare, the Contractor liable
to pay to the corporation as liquidated
damages an amount not exceeding
Rs.50.00 for each default or materially
incorrect statement.
Binding and deductions for recovery
of25.0 LIQUIDATED DAMAGES
FOR DELAY IN COMPLETION OF
THE WORK As a Policy, the Contracts
for Works shall contain provision with
regard to levy of Liquidated damages
for delay in completion of the work.
The rate and ceiling of the Liquidated
damages may be fixed suitably case to
case by the competent authority.
CIL
 It may further be noted that clause
above provides for recovery of
liquidated damages (and not by way
of penalty) on the contract price of
delayed completion (whole unit).
 Liquidated damages for delay in
contract thus accrued will be
recovered by the paying authorities
of the contractor specified in the
contract order, from the bill for
payment of the cost of contract
 The Company may deduct the
amount of liquidated damages from
any money belonging to the Contract
in its hand (which includes the
company's right to claim such
amount against Contractor's Bank
Guarantee)
 Any such recovery of liquidated
damages shall not in any way relieve
the Contractor from any of its
obligations to complete the works