What is a No Damages for Delay Clause?
One of the primary purposes of construction contracts is to allocate risk. When your Florida construction lawyer draws up your contract, he or she is doing so in a way to best protect you if the unexpected incidents occur. It’s becoming commonplace for contracts to include a “no damages for delay” (NDFD) clause. Simply stated, NDFD clauses prohibit contractors or subcontractors from submitting delay claims to recover financial losses caused by construction delays. These delays may be caused by a number of factors including those controlled by the owner or contractor.
NDFD clauses are designed to protect the owner from claims made by contractors and contractors from claims made by subcontractors. Under normal circumstances, the party in a contractual agreement that caused a construction delay would be obligated to compensate the other party for financial losses originating from the delay. With NDFD clauses, contractors and subcontractors assume the financial risk.
As you can imagine, NDFD clauses are controversial. A number of states do not allow for contracts to include them. Generally, there are three factors that need to be present for an NDFD to apply to specific damages and, subsequently, prevent a contractor or subcontractor from receiving financial compensation.
- Language of the clause: The clause must outline specific types of delays as succinctly as possible. Courts often follow the language of the clause very closely when determining its validity in certain delays.
- Type of damage: Whether the delay costs the project time or the contractor money is usually taken into account.
- Types of the delay: Delays that typically occur during construction are usually covered by a NDFD clause. Delays that were not anticipated by either party typically are not covered.
While this clause favors owners over contractors there a few instances where a NDFD clause may not apply. These include:
- Delays that were not considered by both parties.
- Delays caused by active interference by the party being protected by the NDFD.
- Delays caused by the fraudulent practices of the party being protected by the NDFD.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.