Controversial Contract Provisions – No Damages to Delay

11/16/2010

Another controversial contract provision is a no damages for delay clause. Essentially, it provides that the sole remedy in a delay situation is a time extension, but no money for the delay impacts.

Depending upon how the clause is written, it could go further to all time related impacts, including acceleration or disruption too. Again, the question is risk allocation. The Virginia Public Procurement Act voids no damages for delay provisions for covered public projects, but the statute does not apply generally to all construction projects, nor is there a general voiding statute like in some other states.

So for commercial projects, the money impacts of delay are something the courts will leave to the contracting parties. That risk allocation can make or break projects and parties, as the costs of delays can be tremendous. So like with every contract clause, much thought should be given to whether this type of clause is appropriate to your needs and your risk tolerance.

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