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Who should bear the cost of construction delays?

On Behalf of | Dec 7, 2022 | Construction Law, Construction Warranties, Contract Law

A contractor or project owner is likely to incur additional costs and suffer ongoing losses if the project they are working on is delayed. Still, delays are almost bound to happen, or at least, they are an anticipable possibility.

It might seem only fair that contactors and project owners in Fort Lauderdale, Florida, should be compensated for damages caused by a delay that was not their fault. But many construction contracts include delay clauses that seem to prevent this.

What is a delay clause?

A delay clause states which party to the contract should bear the costs of a potential delay. For example, the project owner can include a clause stating that they will not pay the contractor anything extra if there is a delay, even if the contractor is forced to take on additional expenses or suffers damages due to the delay.

Delay clauses can be overcome

Project owners often want to include a delay clause in their construction contract to protect against frivolous claims. Contractors may want a delay clause to protect their financial interests should a delay occur that is not their fault. Still, Florida courts have found that a delay clause does not totally bar an award of damages for a delay that is not the injured party’s fault.

Florida courts have also found that willfully causing a foreseeable delay does not permit the project owner to seek protection through a delay clause to avoid paying out what is fair. It also stands to say that contractors also cannot willfully cause a foreseeable delay.

Some believe that rather than analyzing a delay clause, it is better to examine whether the party breached the implied covenant of good faith.

In the end, the parties involved must achieve a balance. Project owners cannot cause delays thinking they will not have to pay damages to the contractor. But contractors cannot cause delays thinking they will be compensated for them no matter what. Delay clauses may be common in Florida construction contracts, but there are better ways to address the issue of potential project delays.