Para 10.4.5 - Liquidated Damages | KartavyaDesk

Original Rule Text

10.4.6 Quantum of LD 1. While granting extension of the delivery period for delays attributable entirely to the contractor, where the delivery of services or any activity thereof is accepted after expiry of the original delivery period, the Procuring Entity may recover from the contractor, as liquidated damages for each week of delay or part thereof until actual delivery or performance, but not as a penalty, a sum equivalent to the 0.5% (half percent, or any other percentage if prescribed) of the value of delayed portion (that includes variations, taxes and duties) of the Services, subject to a maximum of 5% (Five percent) of the total contract value. Besides liquidated damages during such a delay, the denial clause shall also apply. The Procuring Entity may deduct liquidated damages from payments due to the consultant. Payment of liquidated damages shall not affect the consultant’s liabilities. For purpose of GST, LD should be shown as deduction on the invoice value by the contractor. 2. In case of inordinate delays, this upper limit of LD shall be 10% (Ten percent) of the contract value. (Refer para 10.4.1-4 to understand inordinate delay). 3. In contracts governed by any type of variation (PVC, ERV or statutory variations), LDs (if a percentage of the price) will be applicable on the price as varied by the operation of the PVC. 4. In case of delays for which both procuring entity and consultant may be responsible to a different extent, procuring entity with the approval of CA and concurrence of finance decide a lower quantum of LD, and consider waiver of denial clause on the merit of the case. 5. LDs accrue only in case of delayed services. Where or as far as no services have been rendered under a contract, upon cancellation, recovery of only the loss occasioned by breach

What This Means

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

• •Liquidated Damages (LD) are applicable when consultancy services are delayed due to the consultant's fault.
• •The standard LD is 0.5% of the delayed portion's value per week of delay, up to a maximum of 5% of the total contract value. In cases of inordinate delay, this can go up to 10%.
• •The Procuring Entity can deduct LD from payments due to the consultant, and the consultant must show LD as a deduction on their invoice for GST purposes.
• •If both the Procuring Entity and the consultant are responsible for the delay, the Procuring Entity can reduce the LD amount with the approval of the Competent Authority (CA) and concurrence of finance.
• •If no services have been rendered and the contract is cancelled, only the actual loss caused by the breach can be recovered.

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.