STA April 2015 Newsletter

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STASubcontractors SubcontractorsNews News STA

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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