Volume 7 - Number 48 | December 7, 2009 - Construction Claims Advisor

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You are here: Home » Volume 7 - Number 48 | December 7, 2009

Volume 7 - Number 48 | December 7, 2009

Recent Issues

EDITOR'S NOTES | Issue 7-48: No-damage-for-delay clauses purport to assign all the risk of construction delay to the contractor. These clauses typically disclaim any owner responsibility to the contractor for delay or disruption, regardless of the cause. The contractor waives the right to damages or increased compensation for delay. The contractor's sole remedy is an extension of the performance period.

The one-sided nature of this risk allocation, particularly on publicly bid contracts in which the contractor has no ability to negotiate, has created a backlash. Some state legislatures have declared the clauses void under certain circumstances. Courts narrowly construe the clauses, limiting their enforceability. The highest court of New York has carved out four exceptions to the enforceability of no-damage-for-delay clauses. This recently excused a contractor from its failure to provide timely written notice of claim under the contract. In light of the contract's disclaimer, the claim for delay damages was extra-contractual.

Other cases reported this week involved a price ceiling on a time and materials contract and recovery of attorney fees after a wrongful contract termination. The price ceiling was compromised by the incorporation of the contractor's proposal, which seemed to make the cap contingent on an estimated quantity of work. And in the other case, attorney fees could be recovered under a federal statute only to the extent they were incurred in the appeal of the termination.

NO-DAMAGE-FOR-DELAY CLAUSE EXCLUDES CLAIM FROM CONTRACTUAL NOTICE REQUIREMENT: Due to a no-damage-for-delay clause, a contractor’s claim for delay damages was extra-contractual and not subject to the contract requirement for timely written notice.

PROPOSAL LETTER MAY HAVE NEGATED PRICE CEILING: A price ceiling in a time and materials contract was compromised by incorporation of a proposal letter that seemed to tie the price to an estimated quantity of work.

ATTORNEY FEE RECOVERY LIMITED TO APPEAL OF WRONGFUL TERMINATION: Recovery of attorney fees under the Equal Access to Justice Act was allowed for the successful appeal of a wrongful termination. But, fees incurred in defending subcontractor lawsuits were not recoverable.