Overview
Three recent rulings from state and federal courts have clarified the enforceability and limitations of delay-related contract provisions in construction projects, particularly concerning no-damages-for-delay clauses, concurrent delay, and the recovery of liquidated damages. These cases highlight how courts balance contractual risk allocation with the facts surrounding delay and project performance.
The Three Cases
In Gamma USA, Inc. v. Pavarini McGovern, LLC, a New York appellate court enforced a no-damages-for-delay clause in favor of the prime contractor, despite a one-year delay in starting the subcontractor’s work. The court rejected Gamma’s arguments that the delay was beyond the parties’ contemplation and that the contractor’s failure to provide CPM schedules constituted a fundamental breach. The court reaffirmed that such clauses are enforceable unless the delay is truly “uncontemplated” or there is a fundamental contract breach—standards that were not met in this case. Importantly, the court held that it is the type of delay, not the duration, that determines whether the exception applies.
In contrast, the California Court of Appeal in The Whiting-Turner Contracting Co. v. 250 Fourth Development, LP addressed the limitations of a liquidated damages clause when concurrent delays exist. Although the contractor and the owner each contributed to schedule delays, the court upheld a trial referee’s finding that any delays caused by the contractor were concurrent with owner-caused delays. Because of this concurrency, the owner was barred from recovering liquidated damages—even though apportionment was theoretically possible under the contract. The ruling emphasizes the burden on the party seeking liquidated damages to isolate and prove contractor-only delays.
Finally, in JITA Contracting, Inc. v. Department of Transportation, the Civilian Board of Contract Appeals ruled that the government could recover both “disincentive deductions” for missing an interim milestone and traditional liquidated damages for final completion delays. The board interpreted the contract language to mean that both remedies could apply even when multiple work schedules were awarded—not just when only Schedule A was awarded. While the clause’s phrasing was imperfect, the board favored a reading that gave effect to both forms of time-related penalties, reinforcing the government’s dual-right to enforce milestone and final deadlines under a single contract.
Summary
Together, these decisions underscore the importance of clearly worded contract provisions and reinforce judicial trends in enforcing delay clauses—while also recognizing key exceptions when delay responsibility is shared or misunderstood.
Construction Claims Advisor subscribers can read the full case summaries as well as download the board or court decisions at the ConstructionClaims.Com website:
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