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Where an electrical contractor was delayed in completing its work, the project owner, school district, asserted that the contractor’s claim for delay damages was barred by a “no damages for delay” clause in the contract. The trail court concluded that the clause did not bar the plaintiff’s claim, and the appellate court agreed. Delays were caused by actions of the owner as well as by the construction manager’s failure to adequately supervise the coordinate the work of various contractors and failure to prepare the coordinated construction schedules and drawings.

The contract stated: “Contractor expressly agrees for itself, its Subcontractors and suppliers not to make, and hereby waives, any claim for damages on account of any delay, obstruction or hindrance. Contractor’s sole remedy for any delay, obstruction or hindrance shall be an extension of the time in which to complete the Work.” Despite clauses such as this one, the court explains that damages may be recovered for (1) delays caused by the owner’s bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the owner, and (4) delays resulting from the owner’s breach of a fundamental obligation of the contract.

In this case, Phase II of the construction was to be for 10 months and be finished in February, but was finished in September instead. And Phase III was completed almost a year later than planned. One of the causes of delay was that the owner terminated both the construction manager and the general contractor, and hired 30 subcontractors in lieu of replacing the general contractor. According to the court, the project impediments were wholly unanticipated and, according to expert testimony, were of a character and magnitude not ordinarily encountered or anticipated by parties to a contract of this nature. The court also found that the construction management team failed to substantially fulfill the express contractual obligation to schedule and coordinate the work, resulting in extensive work interruptions or delays and inefficient labor deployment, and that this justified the trial court finding a pervasive and ongoing breach of contract.

Another important aspect of this case concerns a 72 hour notice requirement that “prohibited a contractor from obtaining an extension of time to complete its work if it failed to issue a written request for such relief within 72 hours of the delay.” The court found the requirement applied to the claim and barred damages incurred prior to date the electrical contractor provided notice of its claim to the owner. Clifford R. Gray, Inc. v. City School District of Albany, 277 A.S2d 843; 716 NYS 2d 795.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 3, No. 6 (Sep 2001).

Copyright 2001, ConstructionRIsk.com, LLC