Monthly Archives: October 2021

In Utah, Asbestos Take-Home Exposure Equates to Damages Exposure For Premises Operators and Contractors

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Mark Morris and Tyson Prisbrey | Snell & Wilmer

In its decision Larry Boynton v. Kennecott Utah Copper, LLC, 2021 UT 40, the Utah Supreme Court found that premises operators owed a duty of care to prevent take-home exposure to asbestos dust not only its employees, but also to independent contractors on the premises. The Court found also that by directing a contractor on how to handle asbestos, a premises operator retained control over the contractor’s handling of the asbestos and thus retained the liability.

During the 1960s and 1970s, Larry Boynton was exposed on several job sites to asbestos while working as a laborer/electrician: as an employee of Kennecott Utah Copper, LLC (“Kennecott”) and later as an independent contractor working at Kennecott’s smelter; as an employee of L.E. Myers, an independent contractor at Phillips 66/ ConocoPhillips’s (“Conoco”) oil refinery; and as an employee of Jelco-Jacobsen, general contractor for PacifiCorp to build its Huntington Canyon Power Plant. While working at Kennecott’s and Conoco’s facilities, and while apparently not directly exposed to asbestos, he worked closely with Kennecott and Conoco employees who were working with asbestos-laden material, which allegedly created asbestos dust. While working at the PacifiCorp plant, PacifiCorp did not use its own employees to handle asbestos material, but instead contracted with Jelco-Jacobsen to build the plant and use asbestos-containing material. Larry alleged that during these years, he brought home asbestos dust in his clothes and car, exposing his wife Barbara to asbestos. Barbara was diagnosed with malignant mesothelioma in February of 2016 and died a few weeks thereafter.

Larry filed suit against Kennecott, Conoco, and PacifiCorp for strict premises liability and negligence. The trial court granted summary judgment in favor of two of the operators, finding no duty to protect against “take home” exposure. The Court analyzed the duties owed by Kennecott and Conoco to Barbara based on the take-home exposure of asbestos generated by Kennecott and Conoco employees. The Court then analyzed the duties owed by PacifiCorp to Barbara based on PacifiCorp’s retained control over Jelco-Jacobsen’s work with asbestos.

First, the Supreme Court found that premises operators like Kennecott and Conoco have a duty to exercise reasonable care to prevent take-home expose to asbestos. The Court analyzed the factors to establish a duty of care, concluding that: 1) Kennecott and Conoco caused its employees to handle asbestos, thereby causing asbestos dust to be released, which was an affirmative act; 2) the risk of take-home exposure to asbestos was unambiguously foreseeable at the time; and 3) premises operators are better suited to prevent injury from take-home exposure due to their greater control and knowledge.

Second, the Supreme Court analyzed whether PacifiCorp’s retained control over Jelco-Jacobsen’s work with asbestos would open PacifiCorp to liability for take-home exposure of asbestos. The traditional rule is that the party contracting with an independent contractor is not liable for physical harm caused to another by an act or omission of the contractor or its servants because the party who hires the independent contractor does not participate in the way in which the contractor’s work is performed, and therefore owes no duty of care concerning the safety of the independent contractor’s employees. But the Court found that the “retained control” doctrine is a common exception: for example, if the employers of a general contractor retains control over the operative details of doing the work of the subcontractors, the general contractor retains the liability.

The Court found that PacifiCorp’s contract with Jelco-Jacobsen demonstrated that PacifiCorp retained at least some control over Jelco-Jacobsen. The contract explicitly required Jelco-Jacobsen to use asbestos materials, and even required approval from PacifiCorp for any substitution of materials. The contract also provided PacifiCorp the general right to inspect the job and stop work if the job was deemed unsafe. The contract required certain means and methods of the work; PacifiCorp specified how to cut and install insulation, the thickness of the insulation, how to mix the asbestos cement, and how to lay the cement. Finally, the contract provided that PacifiCorp would direct Jelco-Jacobsen in dust control safety measures. These four contractual provisions demonstrated that PacifiCorp retained at least some control over Jelco-Jacobsen such that the Court reversed and remanded for the district court to define the injury-causing activity to determine whether PacifiCorp retained control over any injury-causing activities.

Some take-aways for owners and contractors: First, premises operators dealing with asbestos cleanup have a duty to exercise reasonable care to prevent take-home exposure of asbestos. Second, the duty is owed not only to their own employees, but to contractors present on the premises. Finally, to minimize exposure to liability, premises operators should not direct how contractors deal with asbestos cleanup.

The Difference Between Routine Document Destruction and Spoliation

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Steven A. Neeley | Construction Executive

In today’s world, there is a tendency to believe that everything must be preserved forever. The common belief is that documents, emails, text messages, etc. cannot be deleted because doing so may be viewed as spoliation (i.e., intentionally destroying relevant evidence). A party guilty of spoliation can be sanctioned, which can include an adverse inference that the lost information would have helped the other side. But that does not mean that contractors have to preserve every conceivable piece of information or data under all circumstances. There are key differences between routine document destruction (when done before receiving notice of potential claims or litigation) and spoliation.

The Armed Services Board of Contract Appeals decision in Appeal of Sungjee Constr. Co., Ltd., ASBCA Nos. 62002 and 62170 (Mar. 23, 2021) provides a good reminder. There, Sungjee challenged its default termination under a construction contract at Osan Air Base in South Korea. Sungjee argued that the government denied it access to the site for 352 days (out of a 450-day performance period) by refusing to issue passes that were needed to access the base. The government argued that it had issued the passes, but it could not produce them to Sungjee in discovery because they had been destroyed as part of a routine document destruction policy. The base security force issued hard copy passes and entered the information in a biometric system. The government was able to produce the biometric system data but not the hard copy passes because they were destroyed each year.

Sungjee argued the government was guilty of spoliation and moved for sanctions. It asked the Board to draw an adverse inference that the passes would have shown that the government had not issued proper passes on a timely basis, which delayed Sungjee’s performance. The Board denied Sungjee’s motion for several reasons.

First, when the passes were destroyed, the government was not under a duty to preserve them so their destruction could not be spoliation. There are two ways the duty to preserve arises: 

  1. a statutory, regulatory or contractual obligation to preserve documents for a specific period of time (e.g., FAR Subpart 4.7 and Subpart 4.8); or 
  2. litigation is “reasonably foreseeable” and the party should know that the documents may be relevant to the litigation. 

In the Sungjee case, the hard copy base passes were not “contract files” (which agencies must preserve) because the base security force was not a contracting party. Moreover, when the passes were destroyed, there was no reason to think that Sungjee would appeal its termination, so litigation was not “reasonably foreseeable.” Sungjee had not previously asserted an excusable or government delay and had even admitted fault for the delays on several occasions.

Even if the government did have a duty to preserve, the destruction of the passes did not warrant sanctions because the government did not destroy the documents in bad faith or with a “culpable state of mind.” In other words, the passes were destroyed “as a matter of routine policy,” not out of a desire to conceal evidence. The Board also found that Sungjee was not prejudiced because Sungjee could not offer any other evidence to support its argument that the destroyed passes would have supported its position: “If the government’s failure to issue needed passes was indeed the reason Sungjee could not timely perform, it seems highly unlikely that Sungjee would not carefully document this fact, so that at trial it could support its defense against the eventual termination for default with its own contemporaneous records.”

Although the Sungjee decision absolved the government from potential sanctions, its rationale applies with equal force to contractors. Spoliation is not a “gotcha” and sanctions should not be imposed just because data is deleted. The key is whether there was a duty to preserve and whether the documents or data were destroyed out of a desire to conceal the information. If they were, sanctions may be appropriate. But that does not mean contractors must preserve everything forever. Routine document deletion when there is no duty to preserve is appropriate and permissible.

Measure of Damages for Breach of Construction Contract

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David Adelstein | Florida Construction Legal Updates

How do you determine damages for a breach of a construction contract?  If you are interested in pursing a breach of a construction contract action, this is something you NEED TO KNOW!

The recent Fourth District Court of Appeal’s decision in Cano, Inc. v. Judet, 46 Fla. L. Weekly D2083b (Fla. 4th DCA 201) explains:

Where a contractor breaches a construction contract, and the owner sues for breach of contract and the cost to complete, the measure of damages is the difference between the contract price and the reasonable cost to perform the contract. See Grossman Holdings Ltd. v. Hourihan, 414 So. 2d 1037, 1039-40 (Fla. 1982). In Grossman, the supreme court adopted subsection 346(1)(a) of the Restatement (First) of Contracts (1932), which it concluded was “designed to restore the injured party to the condition he would have been in if the contract had been performed.” Id. at 1039. In other words, the owner will obtain the benefit of his bargain [and this is known as benefit of the bargain damages]. But where there is a total breach of the contract as opposed to a partial breach, an injured party may elect to treat the contract as void and seek damages that will restore him to the position that he was in prior to entering into the contract or the party may seek the benefit of his bargain. See McCray v. Murray, 423 So. 2d 559, 561 (Fla. 1st DCA 1982).

In Judet, an owner entered into a fixed price contract with a contractor to repair damage from a lightning strike. The contract amount was $300,000 payable in $30,000 installments.  A few months after the contractor commenced performance, the owner terminated the contractor because the owner learned the contractor had not obtained required electrical and plumbing permits.  At this time, the owner had paid the contractor $90,000.  The contractor recorded a $40,000 lien for an amount it claimed it was owed and filed a lawsuit to foreclose its construction lien. The owner counter-sued the contractor to recover a claimed over-payment and a disgorgement of monies for unpermitted work.  The owner was NOT claiming benefit of the bargain damages, but rather, damages for the contractor’s total breach “to restore him to the position that he was in prior to entering into the contract.”

After a bench trial, the trial court found the contractor committed the first material breach by failing to obtain the required electrical and plumbing permits.  Thus, the trial court held that the contractor was only entitled to the value of the work it performed, an amount of $49,150 as determined by the owner’s expert.  The trial court then entered a judgment in favor of the owner for $40,850 which was the difference between the value of the work performed ($49,150) and what the owner had paid the contractor prior to termination ($90,000).  This was affirmed by the appellate court: “The trial court entered judgment for [the owner] to place him in the position immediately prior to the contract by returning the payments he made to [the contractor] less the quantum meruit value of [the contractor’s] work.”  Judet, supra.

No Damage for Delay? No Problem: Exceptions to the Enforceability of No Damage for Delay Clauses

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Chris Broughton | ConsensusDocs

Introduction:

Under a no-damage-for-delay clause, the owner is not liable for any monetary damages resulting from delays on the project. In lieu of monetary recovery, the contractor’s remaining remedy is a non-compensatory time extension. These clauses are common at the contractor-subcontractor interface as well.

While no-damage-for-delay clauses are enforced in most jurisdictions, some states, either by statute or case law, have limited the enforceability of no-damage-for-delay clauses. Other states have also limited the enforceability of these clauses on state government contracts, and a select few have outlawed them on all projects regardless if they are publicly or privately owned. Additionally, for subcontractors on federal projects, the Miller Act may provide a way to avoid no-damage-for-delay and recover against the general contractor’s payment bond.

This article provides an overview of no-damage-for-delay clauses and the exceptions to enforcement of these clauses. However, due to the consequences of a no-damage-for-delay clause, it is important to know the terms of your contract and the law that governs your project.

Sample No-Damage-for-Delay Clause:

As noted above, an owner or contractor may attempt to prospectively allocate the risk and shift financial responsibility for delay through a no-damage-for-delay clause in the contract.

The ConsensusDocs standard prime and subcontracts do not include a no-damage-for-delay clause. Nevertheless, an example of a no-damage-for-delay clause is as follows:

Contractor agrees that it shall make no claims against Owner for damages, charges, interest, additional costs or fees incurred by reason of delays or suspension of work caused by the Owner, other parties under the Owner’s control, or any other cause in the performance of its work under this Agreement. Contractor’s sole and exclusive remedy for delays, stoppage, or suspension of the work is an extension of time equal to the duration of the delay, stoppage, or suspension to allow the Contractor to complete its work under this Agreement.

A no-damage-for-delay clause like the sample above will likely be enforced in most states. However, as shown below, there are important exceptions that can impact your ability to recover your on project.

Frequently Recognized Exceptions to No Damage for Delay:

While most states will enforce a no-damage-for-delay clause on a construction contract, there are important exceptions that have been developed through the court decisions that can impact your ability to recover your delay costs. Nevertheless, the following are the most common exceptions to a no-damages-for-delay clause:

1.Delays that resulted from the benefiting party’s bad faith, active interference, fraud or misrepresentation. This is the most widely adopted exception to no-damage-for-delay clauses. Courts will not allow a party to benefit from its own fraud, misrepresentation, bad faith, or active interference with the work of the other contracting party. Aside from invalidating a no-damage-for-delay clause, fraud, misrepresentation, bad faith may also give rise to a breach of a party’s implied duty of good faith and fair dealing.[ii] Additionally, other jurisdictions may include gross negligence under this exception as well.[iii]

2. Delays that were of a kind or type not contemplated by the parties. Some jurisdictions have held that no-damage-for-delay clauses will not bar claims resulting from delays that were not reasonably foreseeable or contemplated by the parties at the time contract. The New York Court of Appeals stated that even broadly written no-damage-for-delay clauses will encompass only delays “which are reasonably foreseeable, arise from the contractor’s work during performance, or which are mentioned in the contract.”[iv] An example of a delay “not contemplated by the parties” is an indefinite suspension of the work after an unknown methane gas condition was discovered on site.[v] However, it is important to note that there are many jurisdictions that do not recognize this exception. [vi]

3.Delays that were so unreasonable that they constituted an intentional abandonment of the contract by the benefiting party. A no-damage-for-delay clause will not be enforced where the party benefiting from the clause abandons its contractual obligations. A party’s abandonment can be express or inferred from the benefiting party’s conduct and attendant circumstances surrounding performance. Importantly, abandonment can be inferred where the delays are so “unreasonable in length or duration that they amount to an abandonment of the contract.”[vii] For example, a court found intentional abandonment where the owner issued significant design changes that fundamentally altered the work and delayed the project by over two years. [viii]

4. Delays resulting from a fundamental breach of contract by the benefiting party. While recognized in many jurisdictions, the exception for material breach is less frequently applied because the no-damage-for-delay clause is intended to encompass “garden-variety” delays such as failing to timely provide materials. [ix] To qualify as a “fundamental breach,” the actions of the benefiting party must be a “complete failure of a condition precedent to performance” or “completely frustrate the performance of one of the parties, not merely delay it for a time.” [x]

The cases and examples are discussed above to provide a general overview of the most commonly applied exceptions to no-damage-for-delay clauses. This is not exhaustive, and other states may recognize their own exceptions to no-damage-for-delay. Thus, it is important to understand which exceptions apply and how they are applied under the law that governs your contract.


Additional State Statute Exceptions

In addition to the exceptions listed above, many states have enacted statutes that further limit or prohibit the enforceability of no-damage-for-delay clauses.

Public Contracts

In particular, some states have enacted limitations or exceptions on no-damage-for-delay on state government contracts, where the clause would absolve the government entity of any monetary liability for delays. For example, in Louisiana, no-damage-for-delay clauses are void on public projects if it “purports to waive, release, or extinguish the rights of a contractor to recover… for delays in performing such contract, if such delay is caused, in whole or in part, by acts or omissions within the control of the contracting public entity.” [xi] Virginia’s and Colorado’s statutes prohibiting no-damage-for-delay clauses on contracts between the public entity and contractor have similar language as well. [xii] North Carolina also prohibits no-damage-for-delay clauses on public contracts between the government owner and the prime contractor. [xiii]

Public and Private Contracts

Furthermore, there are a select few states, notably Kentucky, Ohio, and Washington, which go one step further and prohibit no-damage-for-delay clauses on both public and private projects. [xiv] For reference, here is the operative language in Washington’s statute prohibiting no-damage-for-delay clauses:

Any clause in a construction contract, as defined in RCW 4.24.370, which purports to waive, release or extinguish the rights of a contractor, subcontractor, or supplier to damages or an equitable adjustment arising out of unreasonably delay in performance which delay is caused by the acts or omissions of the contractee or persons acting for the contractee is against public policy and is void and unenforceable. [xv]

Federal Contracts and the Miller Act

On federal procurement projects, the standard contract provisions in the Federal Acquisition Regulations (“FAR”) allow the general contractor to recover for the government’s delay. [xvi] Contrarily, absent requirements for subcontractor compliance, directives, provisions flowed down from the FAR, and other exceptions, subcontracts on federal projects are largely governed by state law. Thus, state law will determine whether a no-damages-for-delay clause is enforceable, and if so, what exceptions will apply for subcontractors on federal government projects. However, there are important protections, including the Miller Act, which may prevent enforcement of a no-damage-for-delay clause against a subcontractor in certain circumstances – particularly where the subcontractor asserts a claim against the general contractor’s payment bond and the no-damage-for-delay clause includes conditional payment or recovery language.

The Miller Act provides an alternate route for recovery for subcontractors on federal construction projects when they are not paid in full by the general contractor. Under the Miller Act, general contractors on federal government projects are required to procure a payment bond for those who provide labor or furnish materials on government contracts valued at over $100,000. [xvii] The Miller Act’s purpose is remedial: to guarantee payment and provide an alternate route of recovery in lieu of the mechanic’s lien right that would exist under state law.

The Miller Act may prevent enforcement of a no-damage-for-delay clause against a subcontractor’s claim against the general contractor’s payment bond if the clause includes conditional payment or recovery language. For example, in United States ex rel. Kitchens To Go v. John C. Grimberg Co., Inc., 283 F.Supp.3d 476 (E.D. Va. 2017), the surety could not assert the no-damage-for-delay provision in the contract to prevent the subcontractor’s recovery of its delay damages against the payment bond because the clause at issue conflicted with the Miller Act. The subcontract’s no-damage-for-delay clause stated that the general contractor would not be liable for any delays on the project beyond its control. Furthermore, the no-damage-for-delay clause included language, similar to a pay-if-paid clause, which conditioned the subcontractor’s recovery for any delay costs on the general contractor’s reimbursement for delay from the federal government. [xx]

The no-damage-for-delay clause violated the Miller Act because a subcontractor’s claim against the payment bond cannot be conditioned on whether the government has paid its general contractor. The court noted that to condition the subcontractor’s recovery on the general contractor’s reimbursement from the federal government would frustrate the Miller Act’s purpose: to guarantee payment for those who perform labor or furnish materials on federal projects.

Additionally, the clause did not operate as a waiver of the subcontractor’s Miller Act claim because it was executed before the subcontractor performed on the project. The Miller Act allows a party to waive its right to recover against the bond if the waiver is “(1) in writing; (2) signed by the person whose right is waived; and (3) executed after the person whose right is waived has furnished labor or material for use in the performance of the contract.” In this case, the subcontract, which included the no-damage-for-delay clause, was executed well before the subcontractor started its performance on the project. Thus, the no-damage-for-delay clause did not operate as a waiver of its payment bond claim under the Miller Act.

Again, it is important to note that this decision is very specific to the language in the subcontract and the facts of this case. Thus, subcontractors should look to their contract to determine whether the Miller Act will prevent enforcement of the no-damage-for-delay clause against their payment bond claim.

Conclusion

Owners and general contractors may prospectively allocate responsibility and liability for project delays to the other contracting party through a no-damage-for-delay clause. While these clauses are generally enforceable in most jurisdictions, some states, either through case law or statute, have developed important exceptions to the enforceability of no-damage-for-delay clauses, and a select few prohibit these contracts on all public and private projects. Additionally, for subcontractors on federal projects, the Miller Act may prevent enforcement of a no-damage-for-delay clause in certain circumstances – particularly where the subcontractor attempts to recover against the general contractor’s payment bond and the clause includes conditional payment or recovery language. Thus, due to the consequences of a no-damage-for-delay clause, it is important to know the terms of your contract and the law that governs your contract.

Every two-front war cannot be avoided every time.  But there are certainly practical ways to reduce and minimize this risk.  And adopting some of these approaches can help you avoid a classic blunder (that did not quite make Vizzini’s list).

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See, e.g. J.A. Jones Constr. Co. v. Lehrer McGovern Bovis, Inc., 89 P.3d 1009, 1015 (Nev. 2004); Phoenix Contractors, Inc. v. General Motors Corp., 135 Mich. App. 787, 792 (Mich. App. 1995); White Oak Corp. v. Dep’t of Transp., 585 A.2d 1199, 1203 (Conn. 1991); Dickinson Co., Inc. v. Iowa State Dept. of Transp., 300 N.W.2d 112, 114 (Iowa 1981); W. Eng’rs, Inc. v. State By and Through Rd. Comm’n, 437 P.2d 216, 217 (Utah 1968).
United States ex rel. Williams Elec. Co. v. Metric Constructors, 325 S.C. 129, 134 (S.C. 1997).
John E. Gregory & Son, Inc. v. A Guenther & Sons Co., 147 Wis.2d 298, 304 (Wis. 1988).
Corrino Civetta Constr. Corp. v. New York, 67 N.Y.2d 297, 310 (N.Y. 1986).
See Honeywell, Inc. v. J.P. Maguire Co., 1999 U.S. Dist. LEXIS 1872, at *69 (S.D.N.Y. Feb. 22, 1999).
See U.S. ex rel. Williams Elec. Co., 325 S.C. at 135.
Id. at 134.
See Bovis Lend Lease LMB, Inc. v. GCT Venture, Inc., 6 A.D.3d 228, 229 (N.Y. App. Div. 1st Dep’t, 2004).
Corrino Civetta Constr. Corp., 67 N.Y.2d at 313.
Magco Elec. Contrs., Inc. v. Turner Constr. Co., 2009 U.S. Dist. LEXIS 24499, at *26 (D. Conn. March 26, 2009).
La. R.S. 38:2216(H).
Va. Code. Ann. § 2.2-4335(A); Colo. Rev. Stat. § 24-91-103.5.
N.C. Gen. Stat. § 143-134.
See Ohio Rev. Code. § 4113.62(C); Wash. Rev. Code. § 4.24.360; Ky. Rev. Stat. Ann. § 371.405(2)(c)
Wash. Rev. Code. § 4.24.360
See FAR 52.242-14 (Suspension of Work); FAR 52.242-15 (Stop-Work Order).
40 U.S.C. § 3131 et. seq.
United States ex rel. Kitchens To Go v. John C. Grimberg Co., 283 F.Supp.3d 476, 481-84 (E.D.Va. 2017).
40 U.S.C. § 3133(c).
U.S. ex rel. Kitchens To Go, 283 F.Supp.3d at 483.

Who Owns the Project’s ‘Float,’ and What Should Be Done About It?

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David A. Cox | Stoel Rives

The coined phrase “time is money” especially applies in the construction industry. Construction participants go to great lengths to build their projects on time and avoid delay costs. To facilitate timely project completion, construction schedulers create sophisticated project schedules utilizing the critical path method (CPM).

CPM scheduling identifies the project’s construction activities, organizes them into a logical sequence, and assigns each activity a duration – the designated time for completion. CPM scheduling also identifies which construction activities are “critical” and “noncritical.”

For the purposes of this article, critical activities are those construction activities that must be completed on time or else the entire project will be delayed accordingly. On the contrary, noncritical activities are those that contain “float,” or the extra time that is allotted to complete an activity in addition to the designated duration. For any given construction project, there are various activities on which the project completion date does not depend and therefore may contain float.

Unsurprisingly, construction projects are complex and often experience delays. The party responsible for a delay subjects itself to potentially severe consequences. Some of the ways a project owner can cause a delay are by issuing excessive project changes, failing to respond to contractors’ notices, interfering with contractors’ work, and failing to perform its contractual duties according to schedule – such as making progress payments, and reviewing and approving construction documents, etc. Owner-caused delays potentially equate to increased contractor costs, equipment costs, managerial costs, lost profits, etc.

A contractor can cause a delay by failing to timely perform its work. This can include inefficiencies and loss of productivity, failure to hire sufficient and skilled labor, delayed supply deliveries, scheduling errors, and corrections of construction defects, etc. Contractor-caused delays potentially equate to increased equipment rental costs, labor costs, insurance costs, liquidated damages, etc.

When project delays occur, the owner and contractor each want to “own” the project float to be able to apply the extra time available in the project schedule toward their own delays, thereby avoiding delay consequences and potential liability. In other words, if the contractor owns the float, then the contractor may apply the float to mitigate or eliminate the impact of contractor-responsible delays and the float would be unavailable to the owner to mitigate any owner-caused delays. The inverse would also apply.

The “float” dilemma begs the question: who owns the float?

In the beginning stages of float allocation cases, courts simplistically and generally held that the contractor owned the float. Unfortunately, the early case decisions regarding float allocation provided little analysis behind the courts’ reasoning. Yet, with the increased usage of CPM scheduling in recent decades, courts grew more comfortable with CPM analysis and their decision-making regarding float allocation became increasingly sophisticated.

Accordingly, instead of mechanically allocating the float to the contractor, courts and boards began analyzing the relevant project delay holistically and whether the relevant delay consumed a project’s entire available float, regardless of the party causing the delay. If there was available float in the project to absorb the delay’s impact, then the party causing the delay was allowed to apply the float and mitigate the delay. This holistic approach gave way to the general and current rule that the “project owns the float.” Accordingly, and absent an agreement otherwise, courts now generally hold that a construction schedule’s float is available to the party who “uses” it first, or in other words, on a “first come, first served” basis.

A construction project’s float therefore holds tremendous value to a party’s potential delay liability. Consequently, owners and contractors often negotiate for float-sharing or float-allocating clauses in their contracts. As its name implies, a float-sharing clause generally provides that the project’s float is explicitly owned by the project and is available to any party who may need it to reduce delays to project completion or any other enforceable sharing arrangement. A float-allocating clause generally provides that the project’s float is owned by the owner (or contractor) and that the contractor (or owner) or any other party is not entitled to any adjustment to the project completion date or compensation because of the loss or use of project float.

While a float-sharing or float-allocating contract clause can take various forms, the takeaway is that owners and contractors should carefully understand the impacts float may have on a project and negotiate and contract accordingly. Absent a float-sharing or float-allocating clause in a construction contract, the modern trend is that the “project owns the float.”