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(CDR-2807) Application of Liquidated Damages When the Completion Date is Unknown - Insight from an Egyptian Perspective

The provision of liquidated damages for delay in the completion of a project is common in construction contracts worldwide. The contracting parties are aware of the agreed completion date, which marks the application of the damages and progress is monitored accordingly. However, all too often, due to delays attributable to both the owner and the contractor, the completion date passes, a time extension is not issued and the new completion date is left undetermined. At some point during the works, the owner decides to apply liquidated damages for contractor’s failure to complete the works. Aside from the question of concurrency of delay, and its effect on rendering such application of damages unenforceable or subject to apportionment, there is the question of the owner’s obligation to forewarn the contractor of the new completion date so that the contractor works to that date and takes the necessary measures to achieving this date (regardless of whether the contractor agrees to such date). This paper tackles this second question from an Egyptian law perspective. Two case studies are examined that illustrate the effect of this prior notification by the owner of the new completion date, or lack thereof, on the contractor’s progress. Recommendations are summarized at the conclusion of the paper for construction practitioners.