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Sometimes—but there is no automatic rule. In Triple Point Technology Inc v PTT Public Company Ltd [2021] UKSC 29, the UK Supreme Court held that liquidated damages (LADs) accrued for delayed work completed before termination, while the clause did not produce LADs for work left unfinished after termination. The result came from the wording and structure of that particular contract. Whether LADs continue, stop at termination or run until a replacement contractor finishes the work must be determined from the actual clause and the rest of the agreement.
What the Supreme Court decided in Triple Point
The dispute arose under an English-law contract between PTT, a Thai commodities company, and Triple Point Technology, a US software provider. Triple Point was engaged to design, install, maintain and license a customised commodities-trading system. Payment was tied to contractual milestones.
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The trial judge awarded LADs for delay affecting those two completed stages. The Court of Appeal limited recovery to work completed before termination. The Supreme Court restored the trial award. It accepted that the clause covered delay on the completed stages, but rejected LAD recovery for the unfinished work: the contractual end point was linked to PTT’s acceptance of completed work, and that event could not occur for work Triple Point never completed under the terminated contract.
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The judgment was delivered on 16 July 2021. It replaced the uncertainty that existed when the earlier article on this issue was published, but it did not create a universal answer for every construction contract.
Why termination does not produce one LAD result in every contract
The Court of Appeal had identified three broad possibilities found in earlier authorities:
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- it may continue only up to the termination date; or
- it may continue after termination until the employer or a replacement contractor completes the relevant work.
The Supreme Court treated those as possible constructions, not fixed legal categories with an automatic default. The controlling task is interpretation: read the trigger for liability, the period of accrual, the endpoint, and the termination machinery together. A clause that expressly runs until completion by “the contractor or others” is materially different from one that ends when the employer accepts the contractor’s work. A clause saying nothing about termination may require the court to infer the consequence from its language, the contract’s structure and the commercial setting.
The decision therefore answers the question “Do LADs survive termination?” with “Read the clause.” Termination changes the contractual context, but it does not itself rewrite the bargain.
The four questions to ask when reading an LAD clause
1. What event triggers the daily or periodic sum?
Identify the breach that activates the charge. It might be failure to achieve a sectional completion date, failure to deliver an item, or failure to reach practical completion. Check whether the trigger is objective (a stated date) or depends on certification, notice or another contractual act.
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2. What period does the rate cover?
Look for language such as “for each day of delay,” “from the due date,” or “until completion.” Confirm whether the rate applies to the whole works, a section, a milestone or a discrete item. A clause tied to individual deliverables can produce a different result from a single rate tied to overall completion.
3. What event ends accrual?
The endpoint may be a fixed date, practical completion, actual delivery, acceptance, testing, takeover or another defined milestone. In Triple Point, the phrase “up to the date [PTT] accepts such work” was decisive for the unfinished stages. Acceptance of work that was never delivered was not an available endpoint under the terminated arrangement.
4. What does the contract say happens on termination or replacement work?
Search the termination, completion-by-others, and damages provisions for express wording. Important variations include:
- a statement that LADs accrue until termination;
- a statement that accrued LAD rights are preserved;
- a right to recover LADs until the employer or replacement contractor achieves completion;
- a provision replacing LADs with general damages after termination; and
- an aggregate cap or an exclusive-remedy clause that limits what can be claimed.
Definitions elsewhere in the agreement may change the meaning of “completion,” “acceptance,” “delay” or “termination,” so the operative sentence should never be read in isolation.
How different clause structures can operate
| Clause structure | Likely interpretive question | Possible effect after termination |
|---|---|---|
| “From the due date until the date the employer accepts the work” | Can acceptance occur for work the original contractor never completes? | Accrual may cover completed and accepted work, but not unfinished work; this was the outcome for the relevant stages in Triple Point. |
| “Until completion, whether by the contractor or others” | Does the express reference to others identify the replacement-completion endpoint? | LADs may continue while replacement work is carried out, subject to the rest of the contract and proof of the relevant delay period. |
| “Up to the date of termination” | Is termination the stated contractual stop date? | Accrual normally stops at termination, leaving any later loss to be addressed under other damages provisions. |
| No express termination wording | How do the trigger, endpoint, completion provisions and commercial purpose fit together? | The court must construe the whole agreement; neither continuation nor cessation is guaranteed. |
| Express preservation of “accrued rights” | What amount had crystallised before termination, and does another clause regulate future loss? | Pre-termination LAD entitlement is less likely to be lost merely because the contract is later terminated, but the amount and any cap still require analysis. |
The table describes interpretive possibilities, not safe drafting shortcuts. A single word elsewhere in the contract can alter the result.
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Completed work, unfinished work and accrued entitlement
Separate three periods when assessing a claim:
- Delay before termination. If the contractual trigger occurred and the clause’s conditions were met, LADs may have accrued before termination. The later termination does not automatically erase a right that had already arisen.
- Delay on work completed before termination. Triple Point confirms that a clause can support LADs for delayed stages that were completed and capable of acceptance before the employer ended the contract.
- Delay on work left unfinished at termination. The same clause may fail to provide LADs for this category if its endpoint depends on acceptance of the original contractor’s completed work. The employer may still have a claim for loss under general damages provisions, but that is a different analysis.
Keep a milestone schedule showing each due date, actual delivery, testing and acceptance date, notices, extensions of time and the termination date. Without that chronology, it is easy to combine completed-stage delay with the cost and delay of bringing in a replacement contractor, even though the contract may treat them differently.
LADs are not the same as general damages
An LAD is a sum agreed in advance for a specified breach, commonly delay. Its attractions are predictability for the employer and a defined limit on the contractor’s exposure to that category of loss. General damages are assessed after the breach by reference to loss proved under the applicable law.
If the LAD clause does not cover post-termination delay, the employer may seek general damages for the additional period, including reasonable prolongation or completion costs where recoverable. That claim can raise questions of causation, remoteness, mitigation and proof that do not arise in the same way with a properly applicable daily LAD. The contract may also make LADs an exclusive remedy for delay, in which case a general-damages claim for the same loss could be restricted.
Do not assume that calling a sum “liquidated damages” settles its operation. The court examines the substance and wording of the bargain, the breach identified and the relationship between the LAD, termination and damages clauses.
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Check caps, exclusions and the rest of the liability bargain
The Triple Point appeal also involved a liability cap and the meaning of “negligence.” That matters because a successful interpretation of the LAD clause may not determine the final recoverable amount. Review:
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- whether the cap applies to LADs, general damages, or both;
- whether the cap is expressed as a percentage, a fixed sum or a sub-cap for delay;
- whether delay damages are excluded from a wider exclusion of consequential or indirect loss;
- whether termination costs, replacement-contract costs and LADs fall into separate categories; and
- whether an exclusive-remedy provision displaces other contractual or tortious claims.
These provisions interact. A clause preserving accrued LADs does not necessarily override a monetary cap, and a cap does not answer whether the LAD period ended at termination.
Practical method for an employer or contractor reviewing a live project
- Obtain the executed contract. Use the signed agreement, schedules, amendments, change orders and incorporated standard forms. A tender draft or familiar industry wording is not enough.
- Mark the operative dates. Record contractual due dates, revised dates, extension-of-time decisions, actual delivery, acceptance, sectional completion, termination and replacement completion.
- Map each LAD trigger. Identify whether the rate applies to a section, milestone, item or overall completion and whether a notice or certificate is required.
- Underline the endpoint. Find every reference to acceptance, completion, takeover, termination, replacement work and “until” language. Read definitions and cross-references with it.
- Separate completed and incomplete scope. Calculate any accrued amount for work that was delivered and accepted, then analyse unfinished scope separately rather than extending the same daily rate automatically.
- Test the damages provisions. Check caps, exclusions, exclusive-remedy wording, indemnities and termination-cost clauses. Determine whether a general-damages route remains available for losses outside the LAD clause.
- Preserve evidence. Keep programmes, progress records, inspection and acceptance documents, notices, correspondence, payment certificates and records of replacement procurement. They may establish both entitlement and mitigation.
- Obtain jurisdiction-specific advice. Triple Point is an English-law Supreme Court decision. A different governing law, standard form or later authority may produce a different result.
Common mistakes and how to avoid them
Assuming termination automatically stops LADs
Termination may be the endpoint, but only if the contract makes it so or the clause is construed that way. Check the wording before adopting that position in a notice or account.
Assuming LADs automatically run until a replacement contractor finishes
Replacement completion is not a universal statutory endpoint. It must be supported by the contract’s language and by a defensible link between the original breach and the claimed period.
Charging the same rate for unfinished work without analysing acceptance
Where the endpoint is acceptance of the original contractor’s work, unfinished stages may fall outside the clause, as they did in the relevant part of Triple Point.
Ignoring accrued rights
A termination notice should not casually waive amounts already accrued. Check preservation wording and state expressly which rights are reserved.
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Mixing LADs with completion costs
LADs compensate the specified delay breach. The cost of appointing another contractor, correcting defects or managing termination may be governed by different clauses and must be evidenced separately.
Relying on a standard-form label instead of the signed text
Headings and labels such as “delay damages” are not substitutes for the operative words, definitions, amendments and hierarchy provisions in the executed contract.
What Triple Point means for drafting future construction contracts
Parties who want a predictable post-termination outcome should state it directly. A carefully drafted clause can identify whether LADs:
- stop on termination;
- continue to a specified date or event;
- continue until completion by the contractor or a replacement contractor;
- apply differently to sectional, milestone and overall completion; and
- preserve accrued sums while allocating later losses under general damages.
Drafting should also coordinate the LAD clause with extension-of-time machinery, acceptance tests, termination rights, completion-by-others provisions, liability caps and exclusive-remedy language. If replacement completion is intended to be the endpoint, define how that completion is measured and how the contractor receives credit for work already delivered. If the parties intend a fixed stop at termination, say so and identify the remedy for subsequent completion delay.
For employers, clarity reduces the risk that a court will find the chosen endpoint unavailable after termination. For contractors, it makes the maximum exposure and the relationship between LADs and other damages easier to price and manage.
The legal position in one sentence
Triple Point Technology Inc v PTT Public Company Ltd [2021] UKSC 29 confirms that liquidated damages can survive termination for delay covered by the clause, including completed delayed stages, but the clause may not support LADs for unfinished work; the decisive issue is the construction of the particular contract, read with its termination, damages and liability provisions.
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