Parties commonly agree that a liquidated (fixed and agreed) sum will be payable as damages for the failure to complete by the specified time.

«Konventionalstrafe» (auch «Vertragsstrafe»; clause pénale, pena convenzionale) ist die Leistung, die ein Schuldner dem Gläubiger akzessorisch zu einer Hauptleistung (Primärobligation) für den Fall der Nichterfüllung (oder nicht richtigen, nicht rechtzeitigen Erfüllung) der Hauptschuld verspricht

One of the hallmarks of a good China OEM Contract is that it provides for very specific penalties if the Chinese manufacturer fails to abide by its crucial terms. These penalties will typically be in the form of a liquidated damages provision

Compensation for damage caused by a breach of contract refers to the liability a party faces for failing to perform the contract, either in full or in part, based on the terms of the contract itself or according to PRC law. Currently, the PRC Contract Law, the relevant judicial interpretation and the United Nations Convention on Contracts of International Sales of Goods that China was party to (hereinafter referred to as “Convention”) provide the following for damages for breach of contract:

Parties to a contract use liquidated damages where actual damages, though real, are difficult or impossible to prove

Gebrannte Kunden tendieren zu Vertragsstrafen auf Dokumentationsterminen, die keine Relation zum effektiven Schadenspotential haben. Hier muss sich der Anlagenbauer wehren.

Zu den Eigenarten des schweizerischen Werkvertragsrechts gehört, dass der Unternehmer noch vor dem Ablieferungstermin in Schuldnerverzug geraten kann. Zur Anwendung kommt die besondere Verzugsregel des Art. 366 Abs. 1 OR, die international als vorbildlich gilt54.

While English common law does not allow a penalty clause to be enforced in this situation, it will generally uphold a liquidated damages clause. So how do the UAE’s Civil Code and the UAE courts deal with this situation?

The rule against gharar also affects the damages which are awarded by the Saudi Arabian courts. Thus damages for loss of anticipated future profits, loss of business reputation and loss of goodwill are not ordinarily recoverable through the Saudi Arabian courts, because claims of this nature are considered speculative.

Despite the emergence of best practice construction methods and development of computerised critical path programming, many construction projects will still overrun their original contract period. For an employer, a delay will mean that the asset being constructed will not be able to be used when originally intended. This may mean the employer has to incur additional costs or suffer a delay in receiving income from the project. For the contractor, delay to the completion of the project may result in a liability for delay damages to the employer.