By: Thomas S. Tripodianos Published: November 2005

Delay Damages Part 1

Question. I have received a number of questions surrounding claims for delay damages from various sides of the issue. In order to provide even a cursory understanding of the issues surrounding delay damages I am devoting the November and December column. This month I will take the opportunity to explore important concepts in delay claims.

The legal obligations and rights associated with the concept of delay arise from the obligation implied in every contract that one party will not delay, hinder, or interfere with the performance of the other party. If a party to a contract hinders or prevents performance by the other party or renders it impossible, it may not benefit from this wrong.

As with any other claim, the key elements to recovery on a delay claim are cause and effect. The aggrieved party must show that the other party is responsible for the event and that the event had the effect of delaying the job and increasing the claimant's costs.

Duty to Coordinate: The implied duty to schedule and coordinate may impose an obligation upon the person responsible for scheduling to schedule the work in a reasonable sequence. Unreasonably interfering with work activities of contractors or subcontractors may violate this implied duty to schedule the work in a reasonable manner. Failure to schedule and supervise the work adequately might prevent a contractor from recovering damages from an owner.

Duty Not to Delay: The duty not to delay, hinder, or interfere with the performance of other parties to the contract is an implied term in most construction contracts. Various acts or omissions by a party can constitute interference with another party's work and impact upon a project schedule. If an owner is responsible for furnishing materials, labor, or information to the contractor, the failure to do so in a timely manner may constitute interference with the contractor's work.

Duty to Cooperate: The duty to cooperate is implied in every construction contract and the failure to do so may also have an impact on a project schedule. The duty usually applies in all phases of construction. It may require an owner to rectify problems in the drawings, and at the same time require a contractor to cooperate with a subcontractor in rectifying a problem during construction.

Duty to Extend Time: The duty to grant reasonable time extensions may impact a project schedule when the failure to do so results in further delay, By failing to grant a necessary time extension within a reasonable period of time, the owner may be held to have accelerated the contractor to finish earlier than it should have finished.

Compensable Delay: From a contractor's perspective, compensable delays are those for which the owner is responsible in damages, because an owner-caused delay is a breach of the duty not to hinder or disrupt the contractor's performance. Accordingly, the contractor is entitled to both compensatory damages and a time extension when such a compensable delay occurs. The same concept would apply as between a contractor and subcontractor.

Excusable Delay: An excusable, but non-compensable, delay entitles the contractor to a time extension but no more money. It is a delay for which neither party (contractor nor owner) is responsible. When unanticipated outside forces delay completion of the work, the delay is excusable under the terms of most contracts. The contractor is not entitled to compensation from the owner because no breach of contract is involved, but is entitled to an extension of performance time under the contract if it so provides.

Concurrent Delay: Concurrent delays are delays which occur, at least to some degree, during the same period of time. The term is used in construction law most frequently when a compensable delay and an unexcusable delay occur concurrently or in overlapping time periods.

Notice Clauses: Most construction contracts (and many statutory provisions) require that any claim for additional compensation or performance time be preceded by written notice to the owner or architect within a definite period of time. A notice requirement is imposed to protect the interest of the owner, who may be unaware of the causes of the particular delay and thereby precluded from taking immediate measures to rectify the situation. Failure to give prompt notice may cause the owner to deny the time extension request and result in time-consuming litigation over the issue of proper notice.

Formal notice may be held to be unnecessary when the owner has actual or constructive knowledge of the problem or when the lack of notice does not prejudice a legitimate owner interest. However, since some courts view notice as a condition precedent to recovery, the better practice is to provide the written notice required by the contract.

The contractor who gives the owner prompt written notice of delays and disruptions that are the owner's responsibility increases its opportunity to recover the costs generated by those problems. In the process, the contractor may also motivate the owner to alter existing costly contract administration procedures.

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