Construction contracts and no-damages-for-delay clauses in Massachusetts

No-damages-for-delay clauses are generally designed to protect a contractor from a sub-contractor's money damage claim arising from delays on the project. . These provisions deal with unforeseen delays that require the contractor to delay or slow the progress. Examples of such causes of delay could include a strike or fire, but often exclude delays due to poor weather or insufficient material orders.

The provision can lead to construction litigation since the contractor may be forced to delay work for various reasons, potentially leading to a large financial deficit for the contractor and losses for the sub-contractor. Costs incurred by the sub-contractor during these wait times can be problematic. However, this type of clause prohibits the sub-contractor from receiving any monetary damages due to these delays. Instead, the sub-contractor's only remedy is an extension for performance completion.

States vary in how rigorously they uphold these provisions. However, Massachusetts generally has a reputation for enforcing these clauses.

Are these clauses valid?

According to the American Society of Civil Engineers (ASCE), Massachusetts is not alone in upholding these provisions. These clauses are often upheld by court. Basic guidelines were set by the case Western Engineers, Inc. v. Utah State Road Commission.

Generally, according to this holding, provisions are found invalid when four things are established. First, the delay that led to the dispute must be connected to a fraudulent or unreasonable act on the part of the contractor to stall the sub-contractor or keep the sub-contractor from completing work. Next, the delay must be long enough to support any reasonable sub-contractor abandoning the work. Third, the cause for the delay was not listed as an allowable reason within the provision. Finally the delay must not be one that was contemplated by the parties to the contract prior to signing the contract.

What do the clauses look like?

The ASCE provides the following example of a typical no-damages-for-delay clause:

The Sub-Contractor agrees to make no claim for damages for delay in the performance of this contract occasioned by any act or omission to act on the part of the Contractor or any of its representatives, and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work as provided herein.

The ASCE also notes that some contracts may include similar provisions, but with less direct wording. Those who are looking for this type of clause should watch for provisions labeled with "Extensions of Time" or other similar headings.

Can legal counsel help?

Clauses touching on no-damage-for-delay issues may also be included within other provisions within the construction contract. It is imperative that contracts be carefully reviewed in their entirety. As a result, those who are entering a construction contract or find themselves fighting for damages are wise to seek the counsel of an experienced construction litigation lawyer. This legal professional can review the contract prior to signing and help you understand your legal rights. This could include drafting revisions to either remove or clarify potentially harmful provisions. An attorney could be an essential advisor if litigation is imminent, working to better ensure your legal rights are protected.