Gallet Dreyer & Berkey, LLP | No Recovery for Contemplated Construction Delays
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No Recovery for Contemplated Construction Delays

04/09/2011 | Spring 2011 Newsletter
Property owners typically require contractors to sign contracts which provide that the contractor cannot sue the property owner for any damages for any delays.

It has been almost three decades since the highest court of New York proclaimed that such “no-damage-for-delay” clauses are enforceable: “a clause which exculpates a contractee from liability to a contractor for damages resulting from delays…is valid and enforceable and is not contrary to public policy.”

Since that time, contractors have found some narrow exceptions which permit the pursuit of delay claims despite such a clause. One of the most frequently utilized exceptions involves “uncontemplated” delays. The logic here is that while sophisticated business people are free to contract away any rights or claims they might have, they cannot be said to have done so where the claims “were not within the contemplation of the parties at the time they entered into the contract.” Like magic, contractors began contending that all the delays they incurred could not have been contemplated.

In one such case, a contractor argued that his encountering of underground utilities, and the unwillingness of the utility company to move them, was “uncontemplated,” entitling him to damages for delay.

The court was not persuaded. It held that the very existence of a clause in the contract addressing the possibility of finding underground utilities rendered such delays “contemplated.” Moreover, it stated that as an experienced excavator, the contractor should have reasonably foreseen the possibility of the utility company being unable or unwilling to move its lines and pipes.

These days, pursuing a claim for delay damages requires a skillful navigation through the narrow exceptions carved out by the courts. It is not a journey for the faint of heart.