Analysing Damages Claims In Construction Contracts In India: Challenges And Best Practices
- IJLLR Journal
- Jul 31, 2024
- 1 min read
Shaik Ashfaq, P.G College of Law (Osmania University) Vishnu Bharathi S, Vidya Vikas Institute of Legal Studies
ABSTRACT
This research paper delves into the complexities of damages claims in construction contracts in India, exploring the challenges and best practices associated with such claims. It begins by elucidating the concept of damages, particularly in the construction sector, where contracts are uniquely tailored for specific projects involving multiple parties, including employers and contractors. Various types of construction contracts, such as EPC, BOT, and Item Rate contracts, are examined to understand the nuances in their damage clauses.
The paper categorizes damages into predetermined or liquidated damages, actual or unliquidated damages, and incidental or indirect damages, providing an in-depth analysis of each. Legal precedents, such as the Indian Contract Act of 1872, are referenced to outline the statutory framework governing these claims.
Significant challenges in claiming damages are highlighted, including evidentiary difficulties and the computation of losses. The paper discusses accepted formulas for damage calculation, like the Hudson, Emden, and Eichleay formulas, and reviews case law that supports their application. Dispute resolution mechanisms, particularly arbitration, are examined for their role in resolving construction disputes efficiently.
The paper concludes with recommendations for adopting standard forms of contracts that align with international best practices to mitigate disputes and ensure equitable bargaining power between contracting parties. This research aims to provide a comprehensive understanding of damages claims in Indian construction contracts and suggest pathways for improving legal and contractual frameworks to better address such disputes.
