Contractual “no-damage-for-delay” clauses are generally enforceable in most states. As disclaimers, however, they are interpreted narrowly by the courts, though several exceptions to their enforceability have been carved out. The most widely recognized is the project owner’s active or affirmative interference with the contractor’s work.
A municipal project owner in Pennsylvania awarded multiple prime contracts to the various trades, with each contract including a no-damage-for-delay clause. The HVAC contractor later alleged the owner’s poor scheduling and coordination of the trades had delayed its work. An appeals court had to determine whether this had been owner interference, which would render the clause unenforceable.
The other case in this issue addressed an arbitration clause in the AIA General Conditions. The private project owner in Texas sued the contractor in court. How long and to what extent could the contractor participate in the litigation process without waiving its contractual right to demand arbitration of the dispute?
