BERMUDA Law and Practice Contributed by: E Scott Swainson, Katrina Dickson and Erik Gotfredsen, Wakefield Quin Limited
Compensation for Improvements There are no statutory provisions that award compensation on expiry. Most leases give the landlord the option to accept or require removal of the tenant’s fit out. 6.23 Remedies/Damages for Breach Common law and case law govern the damages that are available to a landlord in the event of ter- mination due to tenant default. Such damages tend to be limited to rent arrears, any loss flow - ing directly from the tenant’s breach of covenant (not involving the payment of rent) and any costs incurred by the landlord in enforcing the provi - sions of the subject lease. Typically, security deposits are not paid pursuant to commercial leases in Bermuda. 7. Construction 7.1 Common Structures Used to Price Construction Projects Fixed price construction is common on new - builds and material additions. Renovations are typically “cost and charge” (time spent) contracts, as the extent of the work may not be apparent until substantial demolition has occurred. 7.2 Assigning Responsibility for the Design and Construction of a Project Construction contracts vary depending on the role of the contractor and the architect. Prop - erty developers normally accept liability for both the design and build under pre-sale agreements (generally for “turn-key” product) and tend to employ an in-house project manager or site foreman.
Homeowners would normally engage an archi - tect to design a house and are likely to retain their services to oversee the quality on the build. The bank would normally engage a quantity sur - veyor to manage drawdowns under a construc - tion loan, if applicable. 7.3 Management of Construction Risk Most contracts include wide extensions and exclusions for force majeure events (including encountering hard rock and hurricane events). The contractor should be obliged to maintain contractors’ all-risk liability insurance with the landowner and any lender noted thereon. 7.4 Management of Schedule-Related Risk Construction Contracts Construction contracts for larger projects are generally documented in architect-driven Ameri - can Institute of Architects forms. Smaller pro - jects are often recorded in simple letter agree - ments. Target Dates and Agreed Liquidated Damages The contract may include target dates but agreed liquidated damages are relatively rare. Phased payments are generally linked to the progress of work, so the contractor has a financial incen - tive to perform. Damages for actual losses that are a reasonably foreseeable consequence of a delay resulting from a breach of the agreement can be pursued. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Limited Liability Most construction is carried out by companies incorporated with limited liability. Directors of LLCs are liable for debts incurred whilst the
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