By Bruce Jervis
No-damage-for-delay clauses produce such harsh consequences that they have long been viewed with skepticism by the courts. Starting with the premise that these disclaimers must be strictly construed against the drafting party, courts have carved out numerous exceptions to their enforceability: active interference, bad faith, material breach of contract, unforeseen delay, delay of unreasonable duration, the list goes on.
The exceptions to enforceability are so prevalent that many consider no-damage-for-delay clauses to be of limited effectiveness. Two recent cases call that point of view into question. Last week, we reported on a case out of Illinois where a clause was enforced. Illinois law does not recognize “active interference” as an exception to enforceability. And the facts didn’t support the contention that the delay had been unforeseeable or of unreasonable duration.
Now a Texas court has enforced a delay damage disclaimer even though the delay was caused by the project owner’s material breach of contract. The clause was worded so strongly that it applied to delay caused by fault of any kind on the part of the owner. The court said it could not superimpose exceptions on such clearly worded contract language.
What is your opinion? Are no-damage-for-delay clauses so compromised by the numerous exceptions to enforceability that they are ineffective? Or are they regaining credibility and to be taken at their word? I welcome your comments.
