Masonry Magazine November 2006 Page. 49
While the appropriate state law or legislation may provide relief to the subcontractor who finds himself bound to an overly harsh "no damages for delay" clause, it is always prudent to treat such clauses with caution.
Until recently, no Virginia case had addressed the enforcement of a "no damages for delay" clause and whether exceptions might be recognized under Virginia common law. In Blake Construction Co., Inc. / Poole & Kent v. Upper Occoquan Sewage Authority, the Virginia Supreme Court ruled that the Virginia General Assembly meant exactly what it said when it enacted Section 2.2-4335(A) of the Virginia Public Procurement Act, which regulates "no damages for delay" clauses in public contracts.
The court found a contract to be unenforceable that attempted to release and extinguish all unreasonable delay damages available to the contractor unless the unreasonable delay was coupled with bad faith, willful conduct, malice, gross negligence or abandonment of the contract by the owner. The contract also made exceptions for late payments, late owner-furnished equipment and delayed access to work areas.
Other jurisdictions have been more proactive in recognizing exceptions to the application of these types of clauses. In 1963, the Supreme Court of Pennsylvania in Gasparini Excavating Co. v. Pennsylvania Turnpike Commission recognized that such clauses cannot be raised as a defense where there is an affirmative or positive interference by the owner with the contractor's work. Some examples of actions that rise to the
level of "affirmative interference" under Pennsylvania law include: an owner issuing formal notice to begin work while knowing that the work site is not ready for the contractor; an owner failing to advise the contractor that it would not have access to portions of the project for several months, thus forcing the contractor to incur increased man hours; or even an owner's failure to relocate a water main that subsequently interfered with the contractor's work.
While the appropriate state law or legislation may provide relief to the subcontractor who finds him or herself bound to an overly harsh "no damages for delay" clause, it is always prudent to treat such clauses with caution. When negotiating the terms of a contract that contains a "no damages for delay" clause, be careful to include language that excludes unforeseeable delays from the scope of the "no damages for delay" clause. Also, be sure to always provide timely notice of delays, interference or hindrances caused by the buyer. When appropriate, your notice of delay letter should characterize the event as one of the recognized "no damages for delay" exceptions, rather than simply as a delay.
Jacobus P. Joubert, Esq., is an attorney in the Northern Virginia law firm of Hughes & Associates, P.LLC. He focuses his practice on construction and complex civil litigation. Joubert can be reached at jacobus@hughesnassociates.com or by calling him at (703) 671-8200.
This article is not intended to provide legal advice, but to raise issues on legal matters. You should consult with an attorney regarding your legal issues, as the advice you may receive will depend upon your facts and the laws of your jurisdiction.
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