No-damages for Delay Clause: A Closer Look
Adding to a previous series on key provisions in a construction contract, this post focuses on “no-damages for delay clauses” commonly found in municipal or public construction contracts.
What is a no-damages for delay clause?
A no-damages for delay clause often takes the following form: The contractor shall not be entitled to an increase in the contract sum or payment or compensation of any kind from the owner for direct, indirect, consequential, impact or other costs, arising because of delay, disruption, interference or hindrance from any cause whatsoever . . .
Under a typical no-damages for delay clause, the contractor is entitled to additional time, but not additional compensation, for costs incurred as a result of delays “from any cause whatsoever.” However, there are occasions when a contractor can still recover damages for delays, despite the seemingly “ironclad” language typically used in such clauses.
Receiving damages for delays
The first Florida case reviewing a no-damages for delay clause was Southern Gulf Utilities, Inc. v. Boca Ciega Sanitary Dist., 238 So. 2d 458 (Fla. 2d DCA 1970), in which the court found the no-damages for delay clause was not an absolute bar to the contractor’s recovery. Instead, the court explained that the contractor’s complaint “state[d] a cause of action for damages caused by the knowing delay of the public authority, which transcends mere lethargy or bureaucratic bungling.”
What actions or inactions by an owner transcend “mere lethargy or bureaucratic bungling” in order for a contractor to be entitled to delay damages was answered in Triple R Paving, Inc. v. Broward Cty., 774 So. 2d 50 (Fla. 4th DCA 2000). Triple R involved a road construction project for Broward County. The design was prepared by the County’s consulting engineer. Construction became delayed as a result of a critical design flaw. The contractor brought suit against the County for delay damages. The Fourth DCA found that the engineer had prior knowledge of the design flaw and that the subsequent failure to apprise the contractor constituted “willful concealment of foreseeable circumstances which impact timely performance,” which the court ruled was sufficient to overcome a defense based on the no-damages for delay clause. Triple R discusses three exceptions to the application of a no-damages for delay clause: fraud, bad faith, and active interference by an owner or its agents. These three exceptions “transcend mere lethargy or bureaucratic bungling.”
Thus, in Florida, a no-damages for delay clause may not, in and of itself, absolutely bar recovery. Courts will look to the specific delay-causing circumstances to determine whether those circumstances were caused by the owner or its agents.
Because delays on a construction project are sometimes all but inevitable, an understanding of the implications of a no-damages for delay clause in a public construction contract can potentially prevent legal troubles for the contractor down the road. We recommend that you speak with an experienced Miami construction attorney to help negotiate these terms and assist you with understanding a no-damages for delay clause and other provisions in a public works contract.