The two cases in this issue, each involving attempts to settle payment disputes, illustrate some of the pitfalls in administering the process.

In the first, a subcontractor was attempting to obtain final payment, but the prime contractor said the sub had not complied with a condition precedent to payment. The prime later offered to release payment without the precondition. The sub argued the condition had been waived. Meanwhile, the prime contractor said it had merely been an offer in compromise that, when not accepted by the sub, became nonbinding and inadmissible.

In the second, a project owner refused to pay a trade contractor for what the owner deemed deficient work. The contractor filed a mechanic’s lien on the property, and the owner argued the meritless lien prevented the owner from converting its costly construction loan into a long-term mortgage loan. The owner sued the contractor for slander of title.

A prime contractor did not waive a contractual requirement for waiver and release paperwork from its subcontractor despite offering to release final payment without the waivers.

A contractor filed a mechanic’s lien knowing the lien amount exceeded the value of the work performed and would prevent the property owner from converting its construction loan into a long-term mortgage loan. The contractor was liable for slander of title.

A party to a construction contract can waive a right by acting in a manner inconsistent with the enforcement of that right. A party can also waive a right by failing to follow contractual requirements for the enforcement of that right. A municipal project owner in Pennsylvania did both.

The owner encouraged a contractor to continue work past the completion deadline and made no mention of assessing the liquidated damages stipulated in the contract. The owner paid the contractor for the continued work with no set-off for liquidated damages. And, the owner failed to comply with the AIA General Conditions that required it to give the contractor written notice of a claim for liquidated damages within 21 days of the initial delay.

The second case in this issue called for the Federal Circuit to review the sufficiency of a contractor claim for constructive acceleration of the work schedule. The contractor failed to prove excusable delay on the schedule’s critical path. The government’s grant of a time extension and partial remission of liquidated damages was not evidence of government fault.

The third case involved compliance with the statutory requirement that an agreement to arbitrate be in writing. When a written contract form was unsigned by either party, did that comply?

A project owner waived its right to liquidated damages by encouraging the contractor to work beyond the schedule’s deadline with no mention of liquidated damages. The owner made progress payments without offsetting liquidated damages and did not assert its claim until after the contractor had completed its work.

A contracting officer’s grant of a time extension and partial release of liquidated damages did not establish excusable delay on the schedule’s critical path. The contractor failed to meet its burden of proof regarding constructive acceleration of the work.

A state arbitration statute required a written agreement to arbitrate but said nothing about a signed agreement. An Illinois appellate court, persuaded by federal precedent, held that an unsigned written agreement was sufficient.

This article reviews three recent legal decisions addressing construction delays and the enforceability of related contract provisions, including no-damages-for-delay clauses and liquidated damages. The cases highlight how courts interpret delay risks in subcontracting, allocate responsibility in concurrent delay scenarios, and allow dual recovery of disincentives and liquidated damages under federal contracts. Together, the rulings offer important guidance for both owners and contractors on drafting and enforcing delay-related terms in construction agreements.

Both cases in this issue involve the reasonableness of a period of delay. They arise regarding an owner suspension of the work and an exception to the enforceability of a no-damages-for-delay clause.

The federal Suspension of Work clause gives the government the right to suspend work for a “reasonable duration” without any additional compensation to the contractor. Even when a suspension order was clearly justified and expressly contemplated by the contract, the question remained on whether the suspension’s duration became unreasonable.

A well-recognized exception to the enforceability of a no-damages-for-delay clause is delay not contemplated by the parties. Even though delay damages were broadly and effectively disclaimed, the question arose on whether a one-year delay in notice-to-proceed was so unreasonable that it was beyond contemplation.

To the extent government suspensions of work had been consented to by the contractor or clearly contemplated by the terms of the contract, suspensions could not be considered unreasonable and therefore were not compensable.