Delay Claims

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A no-damages-for-delay clause can bar contractor claims for additional costs a contractor incurs due to delay on a project. Such clauses can be controversial, and at least one state—Virginia—has enacted a statute limiting the use of no-damages-for-delay clauses on public construction projects.

Regardless, many courts will enforce a no-damages-for-delay clause. But there can be exceptions to the enforcement of such clauses.

One of the most common exceptions is where the party seeking to enforce a no-damages-for-delay clause actively interferes with the other party’s completion of its work. A Florida federal court recently considered the active-interference exception in a dispute between a general contractor and a subcontractor.Continue Reading The Active-Interference Exception to the Enforcement of No-Damages-for-Delay Clauses

Owners may argue that a contractor’s delay claim is barred because the contractor signed a release during construction of the project. Owners may also argue that a delay claim is barred because there was an accord and satisfaction regarding such a claim.

While the defenses of release and accord and satisfaction are often lumped together, there are nuances to both defenses. A tribunal recently considered both defenses in a decision that ultimately resulted in the denial of an owner’s motion for summary judgment based on a release a contractor signed during construction.Continue Reading The Defenses of Release and Accord and Satisfaction to Delay Claims

I have written many posts about the enforceability of liquidated damages clauses in construction contracts—a topic that interests many people in the construction industry.

Occasionally, you may see an owner argue that under a liquidated damages provision, the owner has the option to either assess liquidated damages for the late completion of a project or obtain its actual damages associated with a delay.

Recently, a federal court considered whether a liquidated damages clause gave a public owner the right to assess liquidated damages or obtain actual damages.Continue Reading Does an Owner Have a Choice Between Liquidated and Actual Damages for Late Completion of a Project?

When a contractor or subcontractor is terminated for default, the terminating party may seek its damages for completing the defaulted contractor or subcontractor’s scope of work. The cost to complete the work will almost always exceed whatever money was left in the contract to complete the work.

Construction contracts will often expressly allow the terminating party to obtain the above excess completion costs. And under Florida law, “controlling weight should be given to the actual expenditures, made in good faith, that are necessary to complete the job covered by the original contract.” R.K. Cooper Builders, Inc. v. Free-Lock Ceilings, Inc.

But what happens when the excess completion costs include the cost to construct a second building when only one building was contemplated under the parties’ contract?

Will those excess completion costs be considered a form of consequential damages that may be barred under the parties’ contract? A federal court recently considered that question in United States ex rel. Sustainable Modular Management, Inc. v. JE Dunn Construction Company.Continue Reading Does a Consequential Damages Waiver Bar the Recovery of Completion Costs?

Are liquidated damages clauses in construction contracts enforceable? That’s a question that is often litigated in construction disputes.

It’s not surprising that some of the most popular articles on this blog address examples of courts refusing to enforce liquidated damages clauses in a construction contracts. For two examples of Florida courts finding liquidated damages clauses unenforceable, click here and click here.

Generally, liquidated damages provisions are enforceable. But there are circumstances where courts will refuse to enforce such a provision. Under Florida law, a liquidated damages clause will not be enforced if a court concludes it is a penalty clause. There is a two-part test for determining whether a liquidated damages clause will be stricken:

(1) the damages flowing from a breach of contract are not readily ascertainable; and

(2) the daily rate of liquidated damages is not grossly disproportionate to the damages that might be expected to flow from a breach.

While not a Florida case, a Georgia court recently considered whether a liquidated damages clause in a construction contract was enforceable.Continue Reading Georgia Court Refuses to Enforce Liquidated Damages Clause

The enforcement of liquidated damages provisions is a topic that gets a lot of attention in construction-contract disputes. Some of the most popular posts on this blog include examples of courts refusing to enforce liquidated damages provisions. (Click here for one example and click here for another example.)

One reason a court may refuse to enforce a liquidated damages provision is because the specified daily rate of liquidated damages is “grossly disproportionate” to the actual damages that are expected to be suffered due to the contractor not completing the project on time.

In addition, even if a liquidated damages clause is enforceable, it is possible that an owner can waive the right to claim liquidated damages. Under Florida law, to establish waiver, a party must show an intention to give up a known right. A waiver can be express or implied through conduct.

A federal court recently considered whether a project owner waived its right to seek liquidated damages as a matter of law.Continue Reading Can a Project Owner Waive Its Right to Claim Liquidated Damages?

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.Continue Reading Top Three Defenses Against Delay, Disruption, and Inefficiency Claims

If a project takes longer than expected due to unforeseeable reasons beyond the contractor’s control, then the contractor may have a delay claim against the owner. Typical delay-claim damages include extended general conditions, home office overhead, and financing costs.

Delay claims are one of the most common issues that arise on construction projects. Typically, the burden is on the contractor to prove a delay claim, and the contractor must prove the following three elements:

  1. the length of the delay;
  2. the causal link between the delay and the owner’s wrongful acts; and
  3. the harm to the contractor due to the delay (i.e., the contractor’s damages).

The second element can be the most difficult to prove. To show a causal link between the owner’s wrongful acts and the delay, the contractor must show that the owner’s actions affected the activities on the critical path of the project.Continue Reading No Critical Path Analysis for a Contractor Delay Claim? Expect Your Claim to Be Denied.

I recently gave a presentation on essential construction contract provisions at the annual conference for the Florida Municipal Attorneys Association. Part of my presentation addressed liquidated damages clauses in government construction contracts. After speaking, I was approached with follow-up questions about how to determine the proper daily rate for liquidated damages in construction contracts.

A liquidated damages clause is an owner-preferred contract provision that usually sets a fixed amount for which the contractor is liable to the owner if the project is not finished on time. Often, the amount is set as a certain sum of money per day the project is late (e.g., $1,000 per day).

Generally, liquidated damages provisions are enforceable. But there are circumstances where courts will refuse to enforce such a provision (click here for a recent Florida case where the court found a liquidated damages provision unenforceable).Continue Reading Court Finds Liquidated Damages Clause Unenforceable

There are many ways a project owner or contractor can breach a construction contract. The following is a list of the six most common types of claims a contractor may assert against an owner or a subcontractor might make against a prime contractor:

1. Payment claims: One very common dispute is where the owner fails to timely pay the prime contractor or the prime contractor does not pay a subcontractor on time. Cash flow is very important in construction. If the owner does not timely pay the prime contractor, then the prime contractor may have difficulty paying its subcontractors and the subcontractors may not be able to pay their sub-subcontractors and/or suppliers.

Many times, payment disputes turn on whether the owner had a valid reason for withholding funds from the contractor. For example, if the contractor has submitted a payment application for deficient work, then the owner should not have an obligation to pay for that work. But if it turns out that the work was not deficient, then the owner may have breached the contractor by not timely paying the contractor.

Continue Reading The Six Most Common Contractor Claims