Of the many problems that contractors must struggle with, obtaining compensation for extra work and delays are some of the most common. Contracts will frequently contain a “no-damages-for-delay clause” and the procedures necessary to obtain change orders for extra work. Courts will usually enforce the no-damages-for-delay clause and deny recovery when a contractor fails to comply with the contract’s change order requirements, despite the contractor’s performance of change order or extra work.
In the recent case of ADC Contracting & Construction, Inc. v. Town of Southampton, the court addressed claims by a contractor for delay and extra work where the parties’ contract contained a no-damages-for-delay provision and the requirements for obtaining change orders for extra work.
ADC Contracting & Construction, Inc. contracted with the Town of Southampton for the construction of an animal shelter. During the course of construction, the contractor’s work was delayed and additional work was performed.
The contractor sued when the Town refused to pay for the delay and additional work. According to the contractor, the problems with the construction were traced to the Town’s decision to act as its own general contractor. The contractor argued that the Town’s representatives lacked the requisite experience and qualifications for commercial construction. This lack of experience resulted in the interference with and hindrance of the contractor’s ability to orderly and efficiently perform under the contract. Additionally, the contractor argued that the Town’s lack of supervision and coordination resulted in more delays and additional work, all of which increased the contractor’s costs.
In response, the Town argued that the damages claimed by the contractor were barred by the parties’ contract. The Town argued that the contract contained a no-damages-for-delay provision, which expressly barred the delay damages claimed by the contractor. The Town also argued that the contract established specific procedures for obtaining change orders, which procedures were not followed by the contractor. Based on the Town’s defenses to payment, the Town moved for summary judgment.
On the issue of delay damages, the trial court ruled in favor of the Town. The court relied on the express language of the parties’ contract, which stated in part, “where Contractor is prevented from completing work due to a delay beyond his control, an extension of the time to complete the specific task shall be Contractor’s sole and exclusive remedy for such delay.” Though the court recognized exceptions to the no- damages-for-delay provision, the court stated that at worst, the Town’s conduct amounted to “inept administration”, which was within the scope of a no-damages-for-delay clause.
As for the contractor’s request for compensation for additional work performed, the court in this instance denied the Town’s motion for summary judgment. Although the Town offered proof that the contractor did not comply with the contract’s notice and documentation requirements, the court noted that the contract did not explicitly require the contractor to strictly comply with its terms. The court also relied upon evidence presented by the contractor which tended to show that the Town, through the conduct of its employees, may have waived its right to insist upon strict compliance with the contract’s change order requirements. Given the possibility that the contract’s change order requirements were waived by the Town, the court denied that portion of the Town’s motion for summary judgment.
Though typically short paragraphs within a multi-page construction contract, the no-damages-for-delay clause and the procedures for obtaining change orders are each significant provisions for the contractor. Here, in light of the no-damages-for-delay clause, even the Town’s “inept administration” of the construction project did not entitle the contractor to additional compensation for delay. Though the court found evidence to suggest that the change order requirements may have been waived by the Town, the prudent contractor should not rely on obtaining such a judicial finding. Rather, the prudent contractor should be wary of these clauses during contract negotiations and be thoroughly familiar with their contractual requirements.
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April 19, 2021
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