No Damage for Delay Provision

Many construction contracts include a No Damage for Delay provision, which purports to excuse an owner from contractual liability for any damages due to delay caused by the owner, its agents, or other contractors under its supervision. Contractors who face No Damage for Delay provisions in the general or prime contract may often include a No Damage for Delay provision in their contracts with subcontractors as well, and may even do so by a specific incorporation by reference of the prime contract’s delay provisions. Martin Mechanical Corp. v. Mars Associates, Inc. 158 A.D.2d 280, 550 N.Y.S.2d 681 (1st Dep’t 1990). Furthermore, No Damage for Delay provisions in a subcontract is held to the same standards as a provision in a prime contract. Id.

Advocates for the No Damage for Delay provision believe that the clause is necessary and a positive aspect for a construction contract (J. Grubin, No-Damage-For-Delay Clauses: Fair or Foul – The Owner’s Perspective, 78 Mun. Engineer’s J. Issue 2, at 1 (1990)); that such provisions help achieve fiscal stability and integrity; such provisions attempt to deflect troublesome litigation; such provisions intend to protect the public bidding process by ensuring that the lowest bid is actually the lowest bid; and that if contractors know that they alone will bear the cost of delay regardless of fault, the contractor will be less inclined to delay and attempt to extract delay claim money from the owner. Those against the No Damage for Delay provision believe that where a contract is competitively bid, the contractor is forced to increase the contingency factor for such foreseeable contingencies as inclement weather, increased costs, etc. It is argued that if the contract contains a No Damage for Delays provision, contractors will bid even higher in order to account for any unforeseen contingencies. Furthermore, some contractors will not engage in the competition under such terms because the risk of contractor default is significantly increased if delays for which compensation is barred are actually experienced.

No Damage for Delay provisions are enforceable in New York, as long as the basic requirements for a valid contract are met. Corinno Civetta Const. Corp. v. City of New York, 67 N.Y.2d 297, 502 N.Y.S.2d 681 (1986). No Damage for Delay provisions will be strictly construed against the party seeking to avoid liability (Vanderlinde Elec. Corp. v. City of Rochester, 54 A.D.2d 155, 388 N.Y.S.2d 388 (4th Dep’t 1976) and must be construed in light of all relevant proof relating to the nature of the job and circumstances surrounding the signing of the contract. Bradley Environmental Constructors v. Village of Sylvan Beach, 98 A.D.2d 973 (4th Dep’t 1983). Parties seeking to avoid the operation of the provision have the burden of proving that the provision is inapt. Vanderlinde, 54 A.D.2d 155. Each case disputing a No Damage for Delay provision must be judged upon its own facts (Id.) and also requires an investigation of the parties’ knowledge and intent when signing the contract. Dal Const. Corp. v. City of New York, 108 A.D.2d 892, 485 N.Y.S.2d 774 (2d Dep’t 1985).

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