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The Legal and Financial Consequences of Moving to a More Contractor Friendly No-Damage-For-Delay Clause By Adam J. Paterno, Esq. and Carl Oliveri, Grassi & Co., CPAs
According to the New York City Building Congress,
New York’s highest court affirmed the enforceability
Manhattan is poised to add roughly nine million
of no-damage-for-delay clauses in Corinna Civetta
square feet of new office space to its inventory
Constr. Corp. v. City of New York, but also outlined
between 2013 and 2015. If realized, this would be
certain exceptions to their use whereby a contractor
the highest volume of new office space added to New
would be permitted to recover damages. The four
York City over any three-year period since 1990. New
exceptions are: (1) delays that are uncontemplated
construction, plus renovations to older offices, will
at the time of contract; (2) delays so unreasonable
undoubtedly lead to increased activity in all facets
they amount to abandonment of the contract; (3)
of the New York metropolitan area’s construction
delays caused by breach of a fundamental obligation
industry. Since most projects encounter delays, in at
under the contract; and (4) delays due to bad faith,
least some form, a well-drafted construction contract
fraudulent misrepresentation or willful or grossly
that addresses delay damages is critical to keeping a
negligent conduct. 67 N.Y.2d, 502 N.Y.S.2d 681 (1986).
project on time and on budget.
In a separate case, New York’s highest court also made it clear that any type of clause that limit one’s liability
No-Damage for Delay Provision
for willful or grossly negligent acts is void under public
A no-damage-for-delay provision is one way to address
policy. Kalisch-Jarcho, Inc. v. City of New York., 58
delay damages. This type of provision excuses a party
N.Y.2d 377, 461 N.Y.S.2d 746 (1983).
to a construction contract from certain liabilities that it would otherwise incur in the event of a project
Since Corinna, New York courts have revisited the
delay. Owners often use no-damage-for-delay clauses
question of how narrowly these exceptions should be
to shield themselves from unexpected increased
interpreted several times. In Plato Gen. Constr. Corp. v.
costs that arise as a result of project delays. In return,
Dormitory Auth. of State of New York, a no-damage-
contractors also often include such clauses to protect
for-delay clause was difficult to defeat by invocation
themselves from similar exposure in their subcontracts.
of an exception. 89 A.D.3d 819, 932 N.Y.S.2d 504 (2d
Recently, the City of New York introduced a new no-
Dep’t 2011), app denied 19 N.Y.3d 803, 946 N.Y.S.2d
damage-for-delay clause in its standard construction
106 (2012). In Plato Gen. Constr. Corp., Plato (the
contract that makes it easier for contractors to claim
contractor) contracted to work on renovations at
delay damages.
the Brooklyn College Library for the Dormitory
continued on page 22
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