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Construction Contracts: No-Damages-for-Delay Clauses

We've previously discussed some of the costs that come with changing or cancelling construction contracts. Sometimes circumstances change that makes these costs unavoidable. But, where the contract need not be rewritten or cancelled, most of the costs resulting from construction contract disputes can be avoided. Though it sounds like a no-brainer, the best way to avoid these costs is to have carefully drafted contracts, written to anticipate circumstances that may change each party's position.

One contract clause that can be particularly useful in avoiding costs is the no-damages-for-delay clause. These clauses operate to remove a contractor's right to recover any damages for delays caused by the owner's failure to perform. For example, imagine an owner has multiple construction projects going at one time. If something occurs on one project that causes a delay in completing another project, the clause can prevent a contractor from recovering any damages resulting from that delay.

Of course, the words cannot simply be written in the contract to be effective. Careful contemplation in drafting the clause is required. In many cases, these clauses are only held to be valid if it relates to a foreseeable delay. Additionally, the clause may be unenforceable if there was no specific consideration given for its inclusion in the contract. Each of these nuances requires thoughtful consideration when drafting the clause.

Boilerplate language is a great place to start when thinking about contract clauses, but it is often ineffective when it comes time to enforce them. You should sit down with a construction contract attorney who can help you anticipate unfortunate circumstances and draft contracts that effectively address them.

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