Liquidated damages and delay caps: reading the tender’s exposure.

Read the trigger, the daily or weekly rate, any extension or relief, how long the rate can run, and how it sits with other caps or remedies. Those five facts turn delay into a dollar exposure. They do not set the whole contract liability ceiling. Part of our guide on how to read a 400-page tender in a day.

Published: 16 September 2026 · By Andre · Reviewed by Bill · selrob

Takeaways

Record trigger, rate, relief, duration and interaction before anyone prices mobilisation.
An LD cap limits delay damages under that clause. It is not the contract’s liability ceiling.
Whether a stated rate would be enforceable is a question for counsel, not a bid-room conclusion.

How does this schedule turn delay into exposure?

Find the milestone that starts the clock. Write the rate as dollars per named period, and whether the period is a calendar day, a business day or a week. Write what stops the clock: an extension of time actually granted, a relief event, or nothing. Write when accrual ends: commencement, practical completion, termination, or a stated number of days. Then write what else still sits outside that clause: indemnities, abatement, general damages, or a call on performance security.

If the pack uses a weekly rate, record the rounding rule for a part-week before you model. If the pack is silent, the model is unfinished. GST treatment belongs on the same note as the rate. This page models GST exclusive.

This is a bid/no-bid filter, not legal advice. Send counsel the clause, the rate, and the question of whether the figure is open to challenge. Do not bring a penalty-versus-genuine-pre-estimate conclusion back from the bid room.

Annotated clause

Hypothetical public services pack, draft contract clause 18

Hypothetical. The buyer, tender and figures are invented to show the fields in use; they are not a client result. Structure only: a commencement LD, a daily rate, an extension-of-time relief, a clause cap, and a without-prejudice interaction with other remedies.

Hypothetical. Department of Example, Facilities Support Services RFT 2026/17, Draft Contract clause 18. Not a client pack. 18.1 If the Contractor fails to achieve Service Commencement by the Service Commencement Date, the Contractor must pay the Customer liquidated damages of four thousand dollars ($4,000) for each calendar day of delay. 18.2 Liquidated damages under clause 18.1 accrue from the day after the Service Commencement Date until the earlier of actual Service Commencement and the date the Customer terminates. 18.3 The Contractor is not liable for liquidated damages to the extent the delay is caused by a Qualifying Cause of Delay for which an extension of time has been granted in accordance with clause 17. 18.4 The Contractor's aggregate liability for liquidated damages under this clause 18 is limited to ten percent (10%) of the Contract Price. 18.5 Payment of liquidated damages is without prejudice to any other right or remedy of the Customer, including termination and any claim under the indemnities in clause 24.

What to record

Five facts from the clause

Annotation of hypothetical liquidated damages clause 18
Ref	Fact	What to record
18.1	Trigger	Failure to achieve Service Commencement by the Service Commencement Date. Not every delay on the job. Name the milestone.
18.1	Rate	AUD 4,000 per calendar day, GST exclusive in this model. Confirm calendar versus business day on the live pack.
18.3	Relief	Only where an extension of time has been granted under clause 17. Ungranted delay still accrues. Put the EOT process on the same ticket.
18.2	Duration	From the day after the Service Commencement Date until actual commencement or termination. Accrual can run for the whole delay.
18.4–18.5	Interaction	Clause 18.4 caps delay LDs under this clause at 10% of Contract Price. Clause 18.5 leaves indemnities and other remedies standing. The LD cap is not the contract liability ceiling. Indemnity is read on its own page.

Delay calculation

With and without the assumed applicable cap

Hypothetical. Assumptions: Contract Price AUD 2,400,000 GST exclusive; Service Commencement Date 1 November 2026; actual commencement 20 January 2027; delay counted from 2 November 2026 to 20 January 2027 inclusive = 80 calendar days; no extension of time granted; rate AUD 4,000 per calendar day; assumed applicable cap = 10% of Contract Price = AUD 240,000. Figures are not a client result.

Hypothetical delay liquidated damages with and without the clause 18.4 cap
Case	Days	Rate	Gross	Cap applied	Payable in this model
No EOT, no cap	80	AUD 4,000 / calendar day	AUD 320,000	None	AUD 320,000
No EOT, assumed 10% cap	80	AUD 4,000 / calendar day	AUD 320,000	AUD 240,000	AUD 240,000

80 × 4,000 = 320,000. min(320,000, 240,000) = 240,000. The AUD 80,000 difference is the clause cap working on delay LDs only. It does not cap clause 24 indemnities, abatement, or any other remedy left standing by clause 18.5. If the live pack stated a weekly rate without a part-week rule, stop the model and write a clarification.

What does this mean for the bid/no-bid call?

Size the uncapped figure and the capped figure against the firm, not against the fee. If the room cannot carry AUD 320,000 of delay exposure, or cannot carry the other remedies that sit beside it, risk is unfinished. Name the clause, the owner, and the date counsel will answer enforceability. If that date is after close, it is a no-bid. Starting the response while the rate is unread is how a zombie puts on a better suit.

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