Volume 8 - Number 4 | January 25, 2010
Recent Issues
EDITOR'S NOTES | Issue 8-4
No-damage-for-delay clauses are common in construction contracting. A project owner disclaims responsibility for delay or disruption of any kind and assigns that risk to the contractor. Or, a contractor disclaims responsibility and assigns the risk to the subcontractor. These clauses are viewed with skepticism by the courts, which consider them one-sided and "exculpatory." Consequently, a number of exceptions to enforceability have been carved out.
Two of the most common exceptions are delays not contemplated by the parties at the time of contract formation and delays so fundamental as to constitute abandonment of the work. But as a recent federal appellate case illustrates, a carefully drafted contract can avoid these exceptions and provide an enforceable delay disclaimer.
The other cases this week involve an out-of-scope task order under a requirements contract and a prime contractor's attempt to take a duplicate price credit from a subcontractor. The paving contractor with the line item requirements contract was not obligated to accept a task order for golf cart path reconstruction. But once it did, it assumed the risk that it could recoup its costs under the contractual pay items.
The duplicate price credit involved some sloppy contract administration by the subcontractor. The sub signed off on two bilateral, deductive change orders-one purported to cover the direct cost of the deleted items and the other a 120 percent mark-up on that direct cost. The subcontractor had to beseech a court to invoke its equitable powers to relieve the sub of the impact of its mistake.
A subcontractor waived and released delay claims under the terms of a series of bilateral change orders. And in any event, the claims were probably barred by an enforceable no-damage-for-delay clause.
SUBCONTRACTOR DELAY CLAIMS WAIVED AND RELEASED
A subcontractor waived and released delay claims under the terms of a series of bilateral change orders. And in any event, the claims were probably barred by an enforceable no-damage-for-delay clause.
CONTRACTOR ASSUMED PRICING RISK ON OUT-OF-SCOPE TASK ORDER
A contractor did not have to accept an out-of-scope task order under a requirements contract. But having accepted the order, the contractor could not recover compensation beyond the line items of payment under the contract.
SUBCONTRACT REFORMED TO CORRECT DUPLICATE CREDIT
A prime contractor issued deductive change orders that were partially duplicative. The subcontract was reformed to reflect the proper credit.
