{"id":886203,"date":"2015-12-22T18:49:39","date_gmt":"2015-12-23T01:49:39","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=886203"},"modified":"2015-12-22T18:49:39","modified_gmt":"2015-12-23T01:49:39","slug":"limitations-of-liability-scenario-two-no-damages-for-delays-clauses","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/limitations-of-liability-scenario-two-no-damages-for-delays-clauses\/","title":{"rendered":"Limitations of Liability\u2014 Scenario Two: No Damages for Delays Clauses"},"content":{"rendered":"<p>Gregory Faulkner | Robinson Cole | November 10, 2015<\/p>\n<p>Owners often attempt to limit their liability to contractors through what is commonly known in the construction industry as a \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/provide-notice-and-10-other-tasks-when-pursuing-a-construction-claim\/\" target=\"_blank\">no damages for delays<\/a>\u201d clause.\u00a0 Much like waivers of consequential damages, a \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/sixth-circuit-finds-no-coverage-for-property-damage-caused-by-faulty-workmanship\/\" target=\"_blank\">no damages for delays<\/a>\u201d clause, which limits damages for construction delays, accelerations and other inefficiencies, can serve a fair purpose, despite the perceived severity to a contractor who falls behind schedule for reasons beyond its control.\u00a0 These delay-related costs (especially indirect costs such as extended home office overhead or lost bonding capacity) tend to be speculative and difficult to prove.\u00a0 Proving and defending delay claims is also a very expensive proposition, both as to entitlement and quantum.\u00a0 Finally, project owners presume that contractors are better prepared to confront project delays, and to carry costs for such a contingency in their pricing.<\/p>\n<p>In many jurisdictions these clauses are fully enforceable, albeit with limited exceptions that courts have restricted in recent years.\u00a0 Contractors that choose to ignore these clauses do so at their peril.<\/p>\n<p>Nonetheless, no contractor can anticipate every delay or impact, and a protracted delay in a project can have a devastating financial impact on the construction team.\u00a0 There should be a means by which contracting parties can fairly allocate the cost issues that come with unexpected delays, without leaving the door open for speculative claims.<\/p>\n<p>Let\u2019s take a look at three very different <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/important-contract-clauses-for-subcontractors-and-suppliers\/\" target=\"_blank\">contract clauses<\/a> that could limit, or even completely exclude, recovery for delay damages.<\/p>\n<p>The first is a prototypical \u201cno damages for delays\u201d clause:<\/p>\n<blockquote><p>The Contractor\u2019s sole remedy for an excusable delay in the Work shall be an extension of time. The Contractor waives and agrees to make no claims for damages for delay in the performance of this Contract caused by an act or omission of the Owner or its representatives, and agrees that any such claim shall be fully compensated by an extension of time to complete performance of the work as provided herein.<\/p><\/blockquote>\n<p>Contractors likely will seek to avoid clauses that are so broadly worded, or at least attempt to negotiate some limit to its applicability.\u00a0 Project owners may also consider avoiding such broadly worded clauses, as they could lead to inflated initial pricing, excess contingency, claims for additional costs outside of delay, or worst case, a contractor default.<\/p>\n<p>A more effective approach to placing checks on questionable delay costs might be to identify the potential areas of delay up front, and have the Contractor consider the impact in its bid and schedule.\u00a0 Note the following clause:<\/p>\n<blockquote><p>The Contractor shall schedule its operations in such a manner as to minimize interference with the operations of the utility companies or local governments in effecting the installation of new facilities, as shown on the plans, or the relocation or their existing facilities.\u00a0 The Contractor shall consider in its bid all permanent and temporary utility appurtenances in their present or relocated positions and any installation of new facilities required for the project.\u00a0 The Owner will not make any additional compensation to the Contractor for delays, inconvenience or damage sustained by the Contractor due to (i) interference with Project construction caused by the location, condition or operation of utility (including railroad) appurtenances or (ii) the installation, removal, or relocation of such appurtenances; and the Contractor may not make a claim for any such compensation.<\/p><\/blockquote>\n<p>This clause is also a \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/8-best-practice-tips-schedule-analysis-construction-delays\/\" target=\"_blank\">no damages for delays<\/a>\u201d clause, but with a significant difference.\u00a0 This clause addresses a specifically contemplated event of delay (in this case relocation of utilities), which allows the contractor to address such contingencies in its bid and in its schedule.<\/p>\n<p>If a project owner is particularly concerned with claims over specific types of delay damages, a clause <em>limiting<\/em> damages for delays may be more appropriate than an outright prohibition:&#8230;<\/p>\n<p><a href=\"https:\/\/www.constructionlawzone.com\/2015\/11\/limitations-of-liability-scenario-two-no-damages-for-delay-clauses\/\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gregory Faulkner | Robinson Cole | November 10, 2015 Owners often attempt to limit their liability to contractors through what is commonly known in the construction industry as a \u201cno damages for delays\u201d clause.\u00a0 Much like waivers of consequential damages, a \u201cno damages for delays\u201d clause, which limits damages for construction delays, accelerations and other&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/limitations-of-liability-scenario-two-no-damages-for-delays-clauses\/\">Continue reading <span class=\"screen-reader-text\">Limitations of Liability\u2014 Scenario Two: No Damages for Delays Clauses<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9,3],"tags":[72,8998],"class_list":["post-886203","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","category-insurance-claims","tag-construction-contracts-2","tag-no-damages-for-delays","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Limitations of Liability\u2014 Scenario Two: No Damages for Delays Clauses - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/limitations-of-liability-scenario-two-no-damages-for-delays-clauses\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Limitations of Liability\u2014 Scenario Two: No Damages for Delays Clauses - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Gregory Faulkner | Robinson Cole | November 10, 2015 Owners often attempt to limit their liability to contractors through what is commonly known in the construction industry as a \u201cno damages for delays\u201d clause.\u00a0 Much like waivers of consequential damages, a \u201cno damages for delays\u201d clause, which limits damages for construction delays, accelerations and other&hellip; Continue reading Limitations of Liability\u2014 Scenario Two: No Damages for Delays Clauses\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.myconstructionexpert.com\/blog\/limitations-of-liability-scenario-two-no-damages-for-delays-clauses\/\" \/>\n<meta property=\"og:site_name\" content=\"Advise &amp; 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