This post was written by David Cook and Chadd Reynolds.
In continuing our series on common contract provisions found in construction contracts, this post highlights no-damages-for-delay clauses.
Parties to a contract – particularly a construction contract – may agree that the performance of the contract must occur within a set amount of time. When a party is delayed in performing a contract, it may incur additional costs due to the delay. In most circumstances, unless the parties agree otherwise, the delayed party would be entitled to an extension of time to perform the contract. But it may also seek to recover the additional costs resulting from the delay.
A no-damages-for-delay clause attempts to prevent the delayed party from recovering those additional costs. In construction contracts, an upstream party, such as an owner or prime contractor, typically relies on a no-damages-for-delay clause when presented with a delay claim by a downstream party, such as a subcontractor.
The following is a typical no-damages-for-delay clause:
No interruption, interference, suspension, or delay in the commencement or progress of the work for any cause whatsoever, including those for which owner/contractor may be responsible, in whole or in part, shall relieve contactor/subcontractor of its duty to perform or give rise to any rights, damages, or additional compensation from owner/contractor. Contractor/subcontractor’s sole remedy against owner/contractor shall be the right to seek an extension to the time for completion of the work.
Most courts will enforce a clear and unambiguous no-damages-for-delay clause. Some states, however, have enacted legislation limiting or prohibiting the enforceability of such clauses. In addition, courts have adopted varying exceptions to the clause, such as active or intentional interference by the upstream party.