NO DAMAGE FOR DELAY CLAUSE

No Damage for Delay Clause in a Construction Contract

No Damage for Delay Clause in a Construction Contract

Introduction

The contract to build a house is strictly regulated by public policy provisions designed to protect the client developer. The contract to build a house is essential to anyone who undertakes the construction of a house with no more than 2 units for the client (the client) based a plan he proposed. The project owner must own land or holds a call option on the ground. The land can be provided to him indirectly by the manufacturer. However, if the land is sold directly by the professional who built, the contract is a sale in the future completion. This paper is focusing on No damage for delay clause in construction contract.

Two things are true about construction projects. First, just about anything can go wrong. Second, when something does go wrong, someone is getting blamed. To manage these occurrences, contracts often include Damages Clauses, but Damages Clauses are tricky. They manage risk by either placing limits on recovery or eliminating certain types of liability entirely. Laws vary tremendously between states and jurisdictions. Courts may also choose to weigh the enforceability of a damages clause against the covenants of good faith and fair dealing that underpin all contracts (Mark, 2011, 148).

A “No Damage for Delay” provision is a classic construction clause that, if present in the contract, provides that where a contractor is delayed by an event that is not the contractor's fault the contractor's remedy in that instance is limited to an extension of time - and no additional money is provided. However, more time can be little consolation to the contractor when every dollar counts. A myriad of issues can result in delay on a job site. Unforeseen subsurface site conditions can cause a delay. These could include:

Inclement weather;

Acts of God;

Design changes;

Problems with obtaining access to one's work site;

Strikes and/or labor disputes; and

Failure to have timely delivered material and equipment.

FUNCTION: The No Damages for Delay Clause is intended to prevent claims for trivial sums of money that may result from small delays. It provides the damaged party with a time extension as its only compensation for the delay. This clause may be used to limit damage claims by contractors against owners, or by subcontractors against contractors.

RISK: One risk lies with enforceability. Delays can occur for a number of reasons. Some are innocent. Others are not. Consequently, enforceability depends on the nature of the delay. The clause will likely be enforced, if the delays are reasonable and do not result from interference or misconduct. If it can be shown otherwise, the No Damages for Delay Clause may not be enforceable.

COURT: A number of exceptions to enforceability have been defined by the courts. For example, if one party willfully conceals circumstances that will likely cause delays, the court may not enforce the clause. Likewise, if one party acted in bad faith, actively interfered with the performance of the damaged party, or created ...