How do liquidated damages for delay work in UAE construction contracts?

Liquidated (delay) damages are a pre-agreed amount the contract entitles the employer to deduct or claim when the contractor completes late, commonly expressed as a rate per day or week of delay up to a capped maximum. In the UAE, such clauses are enforceable in principle, but they operate subject to the UAE Civil Transactions Law's treatment of agreed compensation and penalty clauses: a court or tribunal has the power to adjust the agreed sum to reflect the actual loss suffered if the stipulated amount is shown to be excessive or if no loss was in fact incurred. This means the contractual figure is a starting point, not always the final amount. The contractor may also defend by proving an entitlement to an extension of time, which moves the completion date and can reduce or eliminate the damages. To apply delay damages, check the contract's delay clause and cap, confirm the adjusted completion date after any EOT, and keep evidence. Because these claims are frequently contested, take advice. Compare verified UAE construction professionals on LEXAI.