By Bruce Jervis
“No-damage-for-delay” clauses disclaim any project owner liability for construction delays, regardless of cause, experienced by the contractor. The one-sided nature of these exculpatory clauses has caused legislatures and courts to carve out exceptions and limitations to their enforceability. Unfortunately for contractors, there is no general exception for owner mismanagement of the project.
In a recent New York case, an electrical contractor complained that the project owner and its agents failed to properly schedule and coordinate multiple trade contractors. This forced the contractor to work out of sequence and in a stop-and-start fashion. Faced with a delay damage disclaimer, the contractor argued that owner mismanagement surely fell within an exception to enforceability.
A court acknowledged that New York law recognizes several exceptions, such as owner bad faith or owner breach of a fundamental contractual obligation, but there is no exception for owner incompetence. Owner mismanagement of the project, without more, is not an exception to the enforceability of no-damage-for-delay clauses.
What is your opinion? If there are exceptions to the enforceability of these clauses, shouldn’t owner mismanagement of the project inevitably fall within one of the exceptions? Your comments are welcomed.