The no-damage-for-delay disclaimer is not as enforceable as it used to be. Perceived as a one-sided term of adhesion, imposed by project owners from a position of superior bargaining power, these clauses have been assailed in the legislatures and the courts. There are now a number of limitations and exceptions when it comes to enforcing delay damage disclaimers.
One of the most widely recognized exceptions to enforceability is “intentional interference.” If the project owner intentionally hinders the contractor’s work, the owner cannot rely on the disclaimer of delay damages. This issue arose recently when a seemingly ironclad clause could not be enforced until the owner refuted the contractor’s allegation of intentional interference. But there is a problem: the term “intentional” is vague and ill-defined.
Some courts have said that in order to be intentional, the interference must result from something more than owner negligence. It must result from an affirmative act. This is a start, but it hardly resolves the wide array of factual occurrences giving rise to construction delay.
Should no-damage-for-delay clauses be strictly enforced according to their plain language? If it is agreed that an owner cannot intentionally interfere with the contractor’s work and still invoke the disclaimer, what is the proper definition of intentional? Must the owner intend to delay the contractor? Or just take an affirmative step which has that result? And what about negligent mismanagement which delays the contractor? As always, I invite your comments below.
Featured in next week's issue of Construction Claims Advisor:
- Pay-If-Paid Clause Not Negated by AIA Prime Contract
- Lost Productivity Award Upheld
- Use of Liquidated Damages Formula Upheld
Bruce Jervis, EditorConstruction Claims Advisor