How to avoid LAD

What LAD means

LAD is not a payment for work done. It is the contract’s agreed figure for delay. The employer, or the main contractor under a subcontract, deducts it when completion is later than the date the contract states, and the rate is the rate the clause sets. The clause itself says when the deduction may be made, and what has to happen first.

How it is avoided

The usual contractual answer is an extension of time. Where delay comes from an event the extension clause covers, the completion date moves, and LAD runs only from the extended date. That application has to follow the clause: the notice the contract requires, the particulars it asks for, and a programme that shows the delay. Records made at the time, rather than a narrative written afterwards, are what the assessment turns on.

• Keep the programme current, and record what actually delayed the work.
• Give the notices the extension clause requires, within the time it states.
• Ask for the extension before treating a deduction as final.
• Do not ignore a certificate or a notice that starts the LAD clock.

How a deduction is contested

A deduction is open to challenge where the contractual machinery was not followed, where an extension of time has not been assessed, where the completion date used is not the date in the contract, or where the rate applied is not the rate the clause states. The correspondence and the certificates usually show which of those it is. The answer is read from the contract as executed, not from a standard form the parties did not use.

LAD and a payment claim

An unpaid sum for work done can still be claimed where LAD has been threatened or deducted. In a CIPAA reference, a set-off may reduce the claim, including to nil. CIPAA is not a procedure for recovering liquidated damages as payment for work done. Where the dispute is the unpaid sum, the route is a CIPAA payment claim. Extension of time and the LAD clause remain matters of the contract, and are often dealt with in the same instruction.