Many construction contracts include clauses that say that neither party will be liable for any “delay” damages arising out of a breach of the contract in some way. These clauses are typically referred to as a “no damages for delay” clause. In general, the clauses will prevent an aggrieved party from recovering for loses that result from the delay – things like lost rent, additional overhead costs and additional loan carrying costs (among many other things).
In almost all instances, courts will enforce the no damages for delay clause. However, sometimes the clauses are not enforceable. Unfortunately for the plaintiffs in LoDuca Associates, Inc. v. PMS Construction Management Corp., the Court determined that they had not met the standard for avoiding the no damages for delay clause in their contract. The court noted that a party seeking to avoid a no damages for delay clause has a “heavy burden” and indicated that a showing must be made that the delay damages which were incurred where not contemplated by the parties at the time of contract. The Court noted that items that are specifically identified in the contract are clearly contemplated by the parties. The Court noted that the length of the delay is part of the analysis in determining whether the delay was within the contemplation of the parties, but clarified that the length of the delay does not “transform a delay caused by an event specifically contemplated by the ‘no damages for delay clause’ into something uncontemplated.
Vincent T. Pallaci is a partner in the New York law firm of Kushnick Pallaci, PLLC. His practice concentrates primarily in the area of construction law. He can be reached at (631) 752-7100 or firstname.lastname@example.org. You can also visit our firm site at www.nyconstructionlaw.com