Are uncapped liquidated damages normal in Australian subcontracts?
They're common — but common isn't the same as acceptable. The market-normal position is liquidated damages capped at 5–10% of the subcontract sum; a clause with a daily rate and no cap leaves your delay exposure unlimited, and it is scored as critical risk in every contract the scanner reads.
Why drafters leave the cap out
Standard-form head contracts usually cap LDs, but the subcontracts drafted downstream frequently don't — the daily rate gets passed down, the cap doesn't. Whether that's template laziness or deliberate, the effect is the same: the smallest party on the job carries the least bounded delay risk.
The exposure compounds with the other clauses. An uncapped rate is priced against your time bar: if EOT claims die on a 5-business-day notice, every administrative slip converts someone's delay into your uncapped liability.
What to ask for
A cap at 5–10% of the subcontract sum is a market-standard ask, not a favour. Pair it with LDs as the exclusive remedy for delay. If the builder won't cap LDs at all, that tells you how they expect the clause to be used — price the job accordingly or walk.
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Scan my subcontract freeCommon questions
The builder says the LD clause is 'standard'. Is it?
A daily LD rate is standard. Leaving the cap out is a drafting choice, and the market position — LDs capped at 5–10% of the subcontract sum — is standard too. 'Standard' is an argument for the cap, not against it.
Should I ever sign a subcontract with uncapped LDs?
Only with your eyes open: know the daily rate, multiply it by a realistic worst-case delay, and treat that number as part of the price of the job. Most subbies who run that arithmetic go back and negotiate the cap.
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General information for Australian subcontractors, not legal advice — statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.