By: Thomas S. Tripodianos Published: March 2008

No Damage for Delay

Question. Are “no claim for delay” clauses enforceable in New York and can an Owner deny a Contractor’s claim based solely on it’s the Owner’s Engineer’s determination?

Answer. YES and YES. The Contractor, entered into a contract with the Owner to perform certain construction work. Due to delays caused by freezing weather in January and part of February and the erroneous belief of the Owner and/or its engineer that an additional permit was required, the Contractor was compelled to stop work and was unable to resume its operations for six months. The Contractor made a claim seeking to recover, out-of-pocket expenses allegedly incurred by the delay in the project, alleged lost profits resulting from the delay, and the cost of certain work which it claimed was extra work not included in the contract price

The lost profit claim is speculative and likely unrecoverable.

The “no claim for delay” clause of the parties' contract exculpated the Owner from liability for damages resulting from delays “in commencement, performance or completion of the Contract, regardless of whether said delays are, or may be caused by the Owner, Engineer or any governmental agency.” That provision is valid and enforceable and is not contrary to public policy ( see Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d 297, 309, 502 N.Y.S.2d 681, 493 N.E.2d 905).

“[E]ven with such a clause, damages may be recovered for: (1) delays caused by bad faith or willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee's breach of a fundamental obligation of the contract” Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d at 309, 502 N.Y.S.2d 681, 493 N.E.2d 905.

The Owner demonstrated that the delay was caused by several factors, including foreseeable winter weather, the Contractor's own conduct, and decisions made by entities specifically mentioned in the contract, to wit, the owner and/or engineer, and a governmental agency. The Contractor failed to illicit any facts which would satisfy the exceptions to the “no claim for delay” clause.

The Owner also denied the extra work claim included in the contract price, based upon the Owner’s engineer's determination that the work was included in the contract price

Where, as here, an agreement clearly and unambiguously indicates that a determination as to what work is to be performed pursuant to the contract is to be made by an engineer, that engineer's determination is conclusive unless the party challenging the determination is able to show the existence of fraud, bad faith, or palpable mistake In this case, Contractor failed to make any such showing so its claim was properly denied.

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