Contractors generally understand that "no damage for delay" clauses can be very unfair but often sign contracts containing such clauses anyway. When such clauses exist in public contracts there is no power of negotiation of terms. You either try to get the job, or leave it.

In Triple R Paving, Inc. v. Broward County, 2000 WL 1584452 (Fla. 4th DCA 2000), a road builder executed a contract containing a no damage for delay clause concerning the construction of a bridge. The clause provided that the contractor would not be entitled to damages: "arising because of delay, disruption, interference or hindrance from any cause whatsoever, …; however, that this provision shall not preclude recovery or damages by the CONTRACTOR for hindrances or delays due solely to fraud, bad faith or active interference on the part of the COUNTY or its agents." (emphasis added)

During the course of the project, three different delays occurred: (1) delay to resolve a horizontal sight distance design flaw, (2) delay caused by FP&L in relocating certain utilities, and (3) delay due to a design flaw concerning the relative elevation of a detention pond in relation to the canal. The contractor claimed delay damages for inefficiency based on the inability to complete the job in the time originally planned despite the 'no damage for delay' clause.

The court said that "clauses providing for 'no damages for delay,' except in the case of fraud, bad faith, or active interference by the owner, are legal and enforceable." However, the court went on to analyze whether the defendants had acted in bad faith because they knew of the horizontal sight distance design flaw but failed to disclose the flaw to the contractor. The court said that "knowledge of the design flaw and the subsequent failure to apprise Triple R of the problem is sufficient to constitute 'willful concealment of foreseeable circumstances which impact timely performance,' such that the 'no damages for delay' clause may be overcome." The court noted that the definition of "bad faith" includes "interference with or failure to cooperate in the other party's performance."

Because the defendants lacked control over FP&L, they were not responsible for the tardy relocation of utilities. Because there was no evidence that the defendants were aware of the detention pond design flaw, they were not responsible for that design flaw. However, because substantial evidence was adduced that defendants knew of the horizontal sight distance design flaw but withheld that information from the contractor, the 'no damage for delay' clause did not bar a recovery. The case was remanded to the trial court so the jury could make the ultimate determination of whether there was sufficient proof of bad faith to allow entitlement to delay damages.

One important lesson from this case is that, although contract provisions aimed at relieving a party from his own fault are not viewed with favor by the courts, "no damage for delay" clauses are enforceable unless they fall within one of the narrow exceptions, such as bad faith.

We would like to address areas of reader concern in these articles. You may submit questions in writing to us by snail mail or email (leibyl@leibylaw.com). Questions should be framed as general, hypothetical questions since we can not provide specific client advice in this format.