Are you reviewing the first contract of the New Year yet? If you are, I hope you are looking to see whether it contains a no damage for delay provision. These provisions are enforceable in Nebraska and can turn a viable project into a disaster.
What is a no-damage-for-delay provision?
Generally speaking , a no damage for delay provision places the risk of loss caused by a delay on the downstream contractor, be it a general contractor or subcontractor. A example of one of these provision provides:
In the event Subcontractor’s Performance of this Subcontract is delayed or interfered with by acts of Owner, Contractor or other subcontractors, or by other events for which Subcontractor is entitled to a time extension under the terms of the Prime Contract, Subcontractor may request an extension of the time for the performance of same, as hereinafter provided, but shall not be entitled to any increase in the Subcontract price or to damages or additional compensation as a consequence of such delay or interference.
Yes, you read that correctly. Even if the delay is caused by the owner or contractor, the subcontractor is only entitled to additional time, no money or damages caused by the delay.
No-Damage-for-Delay Clauses are Enforceable
Nebraska courts have enforced no-damage-for-delay clauses, even where it is clear that the subcontractor did not cause the delay. As our federal court has noted, a subcontractor can recover additional compensation under the subcontract only if the no-damage-for-delay clause is unenforceable because of the general contractor’s concealment, misrepresentation, fraud, bad faith, or malicious intent. So, you’ve got a shot at getting around a no-damage-for-delay clause, but not a very good one.
If you find a no-damage-for-delay clause in your contract, perhaps you should delay signing the contract until you’ve thought about all of the ramifications this clause may have on your performance on the project.