No-Damages-for-Delay Clause: Evaluating Contract Delay Risk

Abstract

In recent years, there have been a number of construction disputes involving no-damages-for-delay clauses in construction contracts. This paper reviews the legal aspects of the no-damages-for-delay clause and presents in an easy-to-use flowchart the issues that need to be addressed to resolve disputes involving the no-damages-for-delay clause. Analysis shows that the clause presents a formidable obstacle for contractors to overcome if monetary damages are to be recovered. The contractor in most instances needs to show that the owner or the owner’s agent caused active hindrance or the owner demonstrated bad faith toward the contractor. The language of the clause is critical to determining the risk it conveys to the contractor. Examples of minimal, intermediate, and maximum risk language are given.