Masonry Magazine November 2006 Page. 48
Legal Issues
Dealing with 'No Damages for Delay' Clauses
Jacobus P. Joubert, Esq.
Hughes & Associates, PLLC
Construction contracts frequently contain "no damages for delay" clauses, providing that the sole remedy for delays will be extensions of time for the completion date. While most subcontractors generally understand that "no damages for delay" clauses can be very unfair, they often sign contracts containing such clauses anyway. This is not unique given the reality that subcontractors generally have little negotiation leverage over their subcontract, this being especially true when many subcontractors bid for the same project.
Although subcontractors usually understand the risk of underbidding for a project to get a job, they frequently overlook the risks of blindly accepting an extremely harsh "no damages for delay" clause, which are routinely enforced by courts throughout the country. There are, however, some exceptions to the harsh application of this type of clause. Two of the most widely recognized exceptions to the enforcement of these clauses include: 1) when the delay was not intended or contemplated by the parties to be within the scope of the clause; or 2) when the delay was the result of active interference by the buyer.
Before considering the different exceptions, it is important to note that while most subcontractors generally understand that "no damages for delay" clauses can be very unfair, they often sign contracts containing such clauses anyway.
The enforceability of such clauses varies from state to state. Some state legislatures have even enacted specific legislation limiting the applicability or enforceability of "no damages for delay" clauses, while other states recognize broad exceptions to the enforceability of such clauses. Therefore, it is always prudent for a subcontractor to be familiar with the particular law that may apply.
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