By Bruce Jervis
A work stoppage is a work stoppage, or so it would seem. Regardless of whether the project owner directs a suspension of work or whether the contractor encounters an unexpected problem that brings work to a halt, the result is the same. But, the contract documents frequently make a distinction, so it does matter.
An owner-directed suspension is usually expressly compensable, with the elements of compensation defined in the contract. Delay and disruption of ongoing work may be treated differently. The contract may disclaim owner liability for delay, regardless of cause. Or, the contract may severely limit recovery of delay damages.
An example of this distinction is found in a recent Pennsylvania case. The contract documents limited recovery for delay, disclaiming compensation for extended job site overhead and lost profit. The project owner suspended work due to contamination of the soil. The court allowed contractor recovery of extended overhead and lost profit. A suspension was not a delay, and the damage disclaimer did not apply.
In this case, the owner expressly directed a suspension of work while it evaluated its options. But, what about a so-called “constructive suspension” of work? How does this differ from a delay? Can the characterization be used to avoid the consequences of a delay damage disclaimer? Or, are we indulging in a purely semantic distinction? I welcome your comments.