Second Department Finds "No-Damages For Delay" Clause Enforceable"

McNamee Constr. Corp. v. City of New Rochelle: Nothing really shocking or new here but worth repeating since it is a commonly used and problematic clause. Here, the contract had a clause stating that there could be no damages for delay in the performance of the contract. Of course there were delays (here due to problems moving underground utility lines) and the contractor sought to hold the City liable for the delays. Court held that the clause is enforceable. One interesting comment by the court that should be noted is the mention that even though the no damages for delay clause is valid, it does not bar either party from seeking recovery of delays or their causes that were not contemplated at the time the contract was entered into. This begs the question? How do we determine what was contemplated at the time of contract? In this case, the court found that it was clear. The excavator should have known of possible problems moving utility lines so when they waved damages for delay, delay due to utility lines was or should have been in their contemplation. However, what if the line is not so clear? My guess is that in a tough economy we are going to see more delay claims hitting the appellate level as funding problems wreak havoc in the construction world. Stay tuned...

Vincent T. Pallaci is a New York construction attorney.  He can be reached at vtp@nyconstructionlaw.com