The certificate that has to come first

Under the JCT standard forms, if the contractor fails to complete by the completion date, the contract administrator issues a certificate saying so. That is the whole document. It certifies a fact that both parties are already painfully aware of, and it takes about four lines.

Its importance is entirely procedural. It is a condition precedent to the employer deducting liquidated damages. No certificate, no deduction, regardless of how obvious the delay was.

Why a formality carries this much weight

Liquidated damages are a contractual remedy that bypasses the ordinary requirement to prove loss. The price of that convenience is procedure: the parties agreed a mechanism, and the mechanism includes an independent certifier confirming that the trigger has occurred before money moves.

Take out the certificate and the employer is deducting on its own assessment of its own entitlement, which is exactly what the mechanism was designed to prevent.

What it does not do

The certificate does not itself authorise the deduction. The employer must still give notice of its intention to deduct, separately, before withholding anything. Two steps, both required, in that order.

It also does not assess the amount. That is a calculation from the completion date after extensions, at the contractual rate, subject to any cap. The certificate says only that completion did not happen on time.

It is cancelled by a later extension

This is the part that causes most of the trouble. If an extension of time is granted after the certificate has been issued, the certificate is cancelled automatically. It has to be reissued against the revised completion date before any further deduction is made.

Extensions are frequently granted months late. By then damages may have been deducted from several payments on the strength of a certificate that no longer exists. The correct response is to reissue against the new date, recalculate, and correct the position in the next payment notice, with the workings shown.

On a sectional contract

Each section needs its own certificate. A certificate covering the works as a whole does not enable deduction against a section that has its own completion date, and one that names the wrong section enables nothing at all.

Getting it on the record

Issue it promptly after the completion date passes, keep the numbering sequential, and record the date it went out and to whom. If it is later cancelled by an extension, note that against it rather than deleting it, because the history of what was certified when is exactly what gets examined if the deduction is challenged.

It is four lines of text that decides whether a six-figure deduction stands. That ratio is worth remembering.