When a contractor’s work on a project is impacted due to no fault of the contractor, the contractor may consider bringing a claim to get paid additional compensation for that impact. Oftentimes, the contractor may assert that its work was delayed, disrupted, or it was otherwise more inefficient than planned.
A contractor asserting a delay, disruption, or inefficiency claim against a project owner can expect the owner to look to any available defenses it has to the claim. After having read many cases involving these types of claims, one can see that the same defenses are frequently asserted.
The top three defenses to delay, disruption, and inefficiency claims include failing to timely submit a contractually compliant claim, waiver / release, and the contract expressly barring such claims. The rest of this post will provide a quick overview of those common defenses.
- Failure to Timely Submit a Claim
One of the most common defenses against claims for delay, disruption, and inefficiency is that the contractor’s claim was not timely submitted in accordance with the contract. Many construction contracts contain specific notice provisions that set forth strict deadlines for submitting claims related to project delays or disruptions. Failure to adhere to these deadlines can sometimes result in the forfeiture of the claim, providing a defense for the party being accused of causing the delay or disruption.
As such, contractors should always review their contracts carefully and ensure they understand the notice requirements for submitting claims. Should a delay or disruption occur, it is essential to act quickly and follow the proper procedures outlined in the contract. Failure to do so can weaken a contractor’s position in the event of a dispute, leaving the contractor vulnerable to the defense of untimely submission of the claim.
- Signing Waivers and Releases
Another common defense against delay, disruption, and inefficiency claims involves the signing of waivers and releases. It is common for the parties to execute monthly releases and waivers of claims in exchange for progress payments. These documents often include language that releases and waives any claims, including delay and disruption claims, that arose during the period covered by the release or waiver.
A well-drafted release or waiver can serve as a defense against subsequent claims of delay, disruption, or inefficiency. The signing party may be deemed to have waived any claims arising during the covered period, even if the party was unaware of the delay or disruption at the time the release or waiver was executed. As such, contractors should always carefully review any release or waiver they are asked to sign and to be cautious about inadvertently waiving their rights to pursue valid claims.
- Contract Expressly Barring Delay, Disruption, and Inefficiency Claims
Finally, many contracts have language that expressly bar claims for delay, disruption, or inefficiency. These provisions, sometimes referred to as no-damages-for delay clauses, may serve as a defense against such claims.
These clauses may provide that the contractor’s sole remedy for delay or disruption is an extension of time, with no entitlement to additional compensation for the delay’s impact. Some clauses may also limit the types of delays for which an extension of time can be granted.
However, the enforceability of no-damages-for-delay clauses can vary depending on the jurisdiction and the specific language of the provision. In some jurisdictions, such clauses may be deemed unenforceable if they are found to be unconscionable or if they violate public policy. Also, these clauses may not protect against claims arising from willful misconduct, bad faith, or active interference by the party seeking to rely on the clause. (For an example of active interference, click here.)
Anyone involved with a construction delay or other impact claim will see the above three defenses frequently asserted. Much like most construction disputes, the specific language of the parties’ contract as well as the facts leading up to the parties’ dispute will determine the merit to any of the above three defenses in the context of a delay, disruption, or inefficiency claim dispute.
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