By Bruce Jervis
Courts strive to limit the effect of delay damage disclaimers, or for that matter any exculpatory language, particularly when the contract was prepared by the party seeking to enforce the disclaimer. There was a recent example in California involving a supplier of shoring equipment.
The supplier’s pre-printed contract form contained a limitation of warranty on the “equipment provided” by the supplier. That limitation included a disclaimer of liability for liquidated damages or any other damages caused by delay; a so-called no-damage-for-delay clause.
The supplier failed to deliver the agreed amount of equipment in accordance with the construction schedule. This delayed the contractor’s completion of the overall project. When the contractor sued the supplier for delay damages, the supplier raised the disclaimer as a defense.
The court ruled that the contractor could recover from the supplier. The disclaimer limited the warranty on “equipment provided.” It did not apply to equipment not provided. It did not apply to delay caused by the failure to provide equipment in a timely manner.
Do you think this was a reasonable interpretation of the contract language, consistent with its intended meaning? Or, was it contrived and overly legalistic, designed to arrive at a desired result? Was the ruling fair, thwarting the supplier’s attempt to slip one-sided language into its boilerplate form? Or, did it deprive the supplier of a right for which it had bargained? I welcome your comments.
