Two clauses decide who pays when a job runs late: the extension-of-time (EOT) clause and the liquidated-damages (LD) clause. Get the EOT process right and you protect yourself; miss the notice and you can be paying a daily rate for a delay you did not cause. Here is how they work — and how the prevention principle can wipe LDs out entirely.
What triggers an EOT
Common qualifying causes:
- Variations that affect the critical path (but note — a variation does not grant time automatically; you claim it).
- Principal/owner acts: late instructions, no site access, sequence changes, late approvals, or late owner-supplied materials.
- Latent conditions materially different from what was reasonably anticipated at tender.
- Inclement weather (often limited to above the historical average).
- Industrial action and third-party events beyond your control.
The exact list and exclusions depend on the form and any amendments.
Claiming an EOT — the notice bars that bite
- HIA/MBA residential: written notice to the owner with the cause and days claimed, within about 20 working days of becoming aware of the cause and extent. On HIA major forms the owner must dispute within 5 working days or the EOT is deemed accepted.
- AS 4000 (commercial): a written claim under clause 34 within 28 days of when you should reasonably have become aware, with the cause, impact and supporting docs (program, records, weather data). The superintendent can grant all, part or none — and has a reserve power to extend even if you did not strictly follow the procedure (that reserve power is what keeps the LD clause enforceable).
Miss the time bar and you can lose the EOT — and then wear LDs for delay that was not your fault.
Liquidated damages — and whether they are enforceable
LDs are a pre-agreed daily amount the owner deducts for late completion. There is no statutory tariff:
- Residential: often around $50–300/day (rent, holding costs, interest) — it should reflect a genuine estimate of the owner's likely loss.
- Commercial: by reference to lost revenue or financing costs — into four figures a day on bigger jobs.
After the High Court decisions in Andrews v ANZ and Paciocco v ANZ, courts generally uphold an LD clause — even one that looks steep — as long as it protects a legitimate commercial interest and is not "extravagant and unconscionable" relative to that interest. Penalty challenges rarely succeed now. (On a consumer or small-business contract, an LD term can still be attacked as an unfair term.)
The prevention principle — your escape hatch
A party cannot claim LDs for delay it caused itself. If the owner delays you and the contract has no working EOT mechanism to extend time for owner-caused delay, the completion date can be "set at large" — it falls away, you only have to finish within a reasonable time, and the LDs become unenforceable. But a properly drafted EOT clause (with a reserve power) neutralises this: time gets extended, so both the EOT and LD regimes survive.
In practice:
- Does the contract allow an EOT for that owner-caused delay? If yes and you claim it (or the reserve power is used) → the date extends, and LDs only run after the extended date.
- If the contract cannot or does not extend time → prevention kicks in, time is at large, and LDs are gone.
- Where owner-delay is only one of several causes → a court may still uphold LDs for the portion the owner did not cause, subject to your EOT compliance.
Common mistakes
- Missing the EOT notice bar (20 working days residential / 28 days AS 4000).
- Assuming a variation gives you time without a separate EOT claim.
- Inventing an LD rate with no connection to likely loss — penalty or unfair-term risk if you draft your own.
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