Purpose and legal basis
LDs compensate the client for delay beyond completion date — without proof of actual loss. Client shows: completion date passed without extension granted; contractor responsible. LDs apply at agreed daily rate. Legal basis: contractual provision (JCT clause 2.32, FMB Domestic Building Contract clause 19). Must be 'genuine pre-estimate of loss' under English law — penalty clauses void. London residential rates £100–£500/day reflect: temporary accommodation £100–£250/day, additional bridging interest £50–£150/day, storage £20–£50/day, services (cleaning, hotel meals).
Typical rates by size
Small extension £75–150k: LDs £100–£250/day; max 10% of contract aggregate. Medium £150–350k: £200–£350/day; max 10–15%. Large renovation £350–800k: £300–£500/day; max 10%. Listed building £500k–£2M+: £400–£800/day. Cap prevents punitive accumulation; reflects practical loss exposure.
Extensions of time
Contractor can claim EOT for: client variations, unforeseen ground conditions, force majeure (extreme weather, strikes), client-caused delays (late approvals, access), statutory authority delays (Thames Water, council). Contract administrator assesses; if granted, completion date extended; no LDs to extended period. Disputed EOT: adjudication. Contractor cannot claim EOT for: own resource issues, poor weather (only extreme adverse counts), normal commercial risks.
Enforcement
Client enforces by deducting from interim payment certificates: contractor's invoice £25k - LDs accrued £4.5k (15 days × £300) = paid £20.5k. Client must issue formal notice of intent to deduct (JCT clause 2.32.1) before deducting. Adjudication: contractor disputing goes to adjudication; rapid 28-day decision. Court: rare residential. Practical reality: LDs as motivator more than recovery — contractors work to avoid; clients often settle pragmatically.
