Contract with Contractor - Tricky Wording?

[MichaelContQues]

Hi,

I need a second interpretation. I'm reviewing a contract and in the liquidated damages condition, it appears that a wording game has been played.

18.1 Liquidated Damages

18.1.1 In case Governmental approval is required and does not occur by the guaranteed governmental approval date; or

18.1.2 In case Governmental approval is not required and construction completion does not occur by the guaranteed construction completion date; and

18.1.3 In case Provisional Acceptance is does not occur by the guaranteed provisional acceptance date, the Contractor will pay the Employer following amounts as liquidated damages:

18.1.3.1 In case of 18.1.1 and 18.1.2 above, (XX amount) per day of delay depending on whether Governmental approval is required or not (for one or the other).

18.1.3.2 In case of 18.1.3 above, (XX amount) per day of delay.​

I understand that even though the intention was to set an LD for both delay completion/governmental acceptance and provisional acceptance, because of the ''; and'' at the end of 18.1.2 that also provisional acceptance would have to be delayed in order for LDs to apply. It's also noticeable that the amounts are mentioned under the provisional acceptance clause and that where its stated that the Contractor will pay employer for delay.

Thanks for your help.

P.S. I simplified the wording for confidentiality purposes but this is the essence.

 

[Rob Legat - SBPL]

This is very poorly drafted. It's possibly aiming to say: If (18.1.1 and 18.1.3) or (18.1.2 and 18.1.3) then damages. But 18.1.3.1 and 18.1.3.2 don't fit with that. This is aside from all the other issues that are there in the wording and nesting.

 

[Rod]

There are 3 trigger events, of which only a maximum of two are possible for a given circumstance. 1 or 2, and 3. It may be that only trigger 3 happens or none happen.

If 1 and 3 -> 18.1.3.1 operates LD
If 2 and 3 -> 18..1.3.1 operates LD
If 3 -> ??
If no triggers -> no LD

If 1 or 2 has not been triggered, then we have a problem with interpretation. Does 18.1.3 operate without 1 or 2 happening? The ordinary reading says trigger 3 cannot operate by itself because (1 or 2) has to be satisfied in addition to 3 (1 or 2, and 3).

However this results in 18.1.3.2 having no effect because it can never be satisfied.

So the better reading would be to unnest 18.1.3.2 making it operate independently of triggers 1 and 2 so if trigger 3 happened by itself then what is now 18.1.3.2 would operate.

Did you or the other party write the contract? And which way do you want the interpretation? If the other party wrote the contract and it is deemed amphibolous by a court then your interpretation can win. It will depend on other surrounding clauses and whether they shed any light on a possible interpretation. Great contract for lawyers

Another issue:

In 18.1.3.1 it says 'In case of 18.1.1 and 18.1.2 above' could be read as needing both 1 and 2 to occur rather than meaning 18.1.1 OR 18.1.2 above. However I think this meaning is unlikely to be construed by a court.