Delay Penalty
A delay penalty (viivästyssakko) is a contractual sanction imposed when a supplier fails to deliver goods or services by the agreed deadline. In Finnish public procurement contracts, delay penalties are standard and serve as a pre-agreed compensation mechanism for late performance.
Definition
A delay penalty is a contractual clause that requires the supplier to pay a specified amount for each day or week of delay beyond the agreed delivery date. In Finnish public procurement, delay penalties are typically set as a percentage of the contract value per day or week of delay, with a maximum total cap. Under JYSE 2014 terms, the contracting authority may impose delay penalties without proving actual damages. The penalty accrues automatically once the delivery date has passed and continues until performance is completed or the maximum penalty is reached.
Practical Example
A contract for delivering office furniture includes a delay penalty of 0.5% of the total contract value per working day, capped at 10%. The contract value is EUR 100,000. If delivery is 5 working days late, the penalty is EUR 2,500 (5 x 0.5% x EUR 100,000).
Common Mistake
Suppliers sometimes underestimate the financial impact of delay penalties. A daily penalty of 0.5% may seem small, but it accumulates to 10% of the contract value in just 20 working days, significantly eroding profit margins.
Frequently Asked Questions
Can a supplier avoid delay penalties due to force majeure?
Yes. Under JYSE terms, a party is not liable for delays caused by force majeure events, such as natural disasters, war, or government actions that prevent performance. The affected party must notify the other party without delay and make reasonable efforts to mitigate the impact.
What is a typical delay penalty rate in Finnish public procurement?
Typical rates range from 0.1% to 1.0% of the contract value per day of delay, with a total cap of 5% to 20% of the contract value. The exact rate depends on the criticality of timely delivery and the nature of the procurement.
Related Terms
Request for Proposals
Understand the request for proposals (tarjouspyyntö) in Finnish public procurement. Key document that defines requirements and evaluation criteria.
JYSE General Terms
Understand JYSE general contract terms used in Finnish public procurement. Standard terms for goods (JYSE Tavarat) and services (JYSE Palvelut).
Liability Cap
Learn about liability caps in Finnish public procurement contracts. How limitations on supplier liability work under JYSE and procurement law.
Contract Period
Learn about contract periods in Finnish public procurement. How sopimuskausi duration, options, and extensions work under procurement law.
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