NEWSLETTER-2019-metin

83 COMMERCIAL LAW Failure to Remedy Defects In case of a defect, the Contractor is under a duty to remedy. If the Contractor fails to remedy any defect or damage within a reasonable time, a date may be fixed by (or on behalf of) the Employer, on or by which the defect or damage is to be remedied. In case the Contractor fails to remedy the defect or damage by this notified date and this remedial work was to be executed at the cost of the Contractor under Sub-Clause 11.2 (Cost of Remedying Defects). In these circumstances, the Employer has several options, which includes a reduction in the Contract Price, termination. In addition to the above, a distinct particularity of the Silver Book should be mentioned. The Silver Book affords the Employer with a right to Rejection. This right is foreseen in Clause 7.5 (Rejection) . The consequences of Rejection are disastrous – particularly for the Contractor – many contractors seek to exclude this provision. Conclusion Provision of liquidated damages in construction contracts is quite common. The parties may also incorporate penalty clauses into their contracts. However, the validity of penalty clauses and whether liq- uidated damages are, indeed, penalties is debated. The answer to this question depends on the law applicable to the contract. Accordingly, correct drafting of these provisions are crucial. It is also important to note that amendment to these standard clauses should be made cautiously. Particular attention should also be given to the limitation of liability clauses and parties using these contracts should carefully consider what they wish to exclude.