A general contractor may be held liable for delays, even after the general has been terminated. In a recent Missouri case, an owner terminated a general contractor for cause, and the owner then demanded that the terminated general contractor pay for delay damages caused by the replacement general contractor’s subcontractor. The court ultimately held that delay damages could be recovered even after the general was terminated from the project.
In this case, Weitz Company was hired as the general contractor of a multi-building apartment complex. The project was delayed. Weitz blamed its subcontractors and the owner blamed Weitz. The owner withheld two payments and Weitz stopped work on the project. Less than one month later, the owner terminated Weitz for cause and finished the project without Weitz.
Weitz then sued the owner for unpaid contract balances and the owner responded demanding delay damages and the cost of contract completion. The owner prevailed on all of its claims. Interestingly, the owner was awarded delay damages through completion of the project as a whole, not through the date of Weitz’s termination. In essence, the court allowed the owner to recover delay damages based upon the delayed performance of a substitute contractor.
This court’s ruling is certainly something to think about when you are considering stopping work. If the replacement contractor is delayed, could your company be on the hook for those delay damages? Or, are your delay damages limited to the date you stop work?