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Volume 8 - Number 12 | March 22, 2010

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Recent Issues

  EDITOR'S NOTES | Issue 8-12
It is fair to say that no-damage-for-delay clauses are not as enforceable as they used to be. Perceived as heavy-handed, one-sided and imposed by project owners through adhesion, these clauses have been assailed in the legislative halls and the courts. Statutory limits and judicially created exceptions have weakened their impact.

In a recent Maryland case, a court ruled that a no-damage-for-delay clause was unambiguous and otherwise enforceable. But, the contractor claimed intentional interference with the work by the project owner, an exception to enforceability under Maryland law. The owner could not enforce the delay damage disclaimer without refuting the interference allegation.

Other cases this week involve a supplier's complicity in a subcontractor's diversion of a progress payment and Ohio's statutory penalties under its prevailing wage law. The supplier's silence regarding the diversion, in an attempt to eventually secure payment for its equipment, cost the supplier its payment bond rights. And, the Ohio Supreme Court ruled that statutory penalties are mandatory, regardless of good faith on the part of the contractor.
  MARYLAND COURT CONSIDERS NO-DAMAGE-FOR-DELAY CLAUSE
A no-damage-for-delay clause was unambiguous and would be enforceable, but not if the project owner intentionally interfered with the contractor’s work or was grossly negligent in the management of the project.
  SUPPLIER LOSES PAYMENT BOND RIGHTS BY CONCEALING PROGRESS PAYMENT DIVERSION
An equipment supplier that helped conceal a subcontractor’s diversion of a progress payment in an attempt to protect the supplier’s payment position was equitably estopped from bringing a claim against the prime contractor’s payment bond.
  WAGE VIOLATION PENALTIES WERE MANDATORY
Statutory penalties for violation of a state prevailing wage law were mandatory, not discretionary.