The Relationship Between Interest and Liquidated Damages in Construction Contracts

  •  Zhijun Shi    


There are certain differences in practice regarding whether the contractor of a construction project construction contract can claim both the contractual or statutory interest and liquidated damages from the employer. From the origin and essence of interest, it can be known that it is a part of the "proceeds" obtained by the lender according to the contract. As long as the delayed payment behavior exists, interest becomes the property that the right holder will inevitably lose. The consequences of the aforementioned "loss" have a direct causal relationship with the debtor's breach of contract and there is no difference due to the construction project or contract. As far as liquidated damages are concerned, they are also a form of liability for breach of contract, with the main purpose of compensating for the losses of the observant party. It is not inappropriate to classify the interest lost by the right holder as a loss under the scope of liability for breach of contract. The basic legal relationship between the employer and the contractor arising from the construction of the project is a contract of contract, not a loan contract. As for the outstanding project funds of the employer, it undoubtedly belongs to the category of overdue payments that are payable but not paid.

This work is licensed under a Creative Commons Attribution 4.0 License.