The No-Damages-for-Delay Clause: A Contractor’s Worst Nightmare
Delays are inevitable in construction. Weather, design changes, supply chain breakdowns, or unforeseen site conditions can derail even the best-run projects. But what many contractors don’t realize is that their contracts may contain a no-damages-for-delay clause—a provision that shifts the financial burden entirely onto them, no matter who caused the delay.
What Is a No-Damages-for-Delay Clause?
This clause states that if the project is delayed, the contractor’s only remedy is more time—not compensation. Even if the owner, architect, or another contractor is at fault, the clause bars the contractor from recovering damages for labor, overhead, or lost profits.
Why It’s So Risky
- Unfair Risk Shift: Contractors bear costs for delays they didn’t cause.
- Cash Flow Strain: Extended timelines without compensation erode profit margins.
- Litigation Exposure: Contractors may still get sued for delays while barred from recovering their own damages.
Are These Clauses Always Enforceable?
Not always. New York and New Jersey courts sometimes refuse to enforce no-damages-for-delay clauses in cases of bad faith, gross negligence, active interference, or delays not contemplated by the parties. But proving these exceptions is difficult—and costly.
Practical Tips for Contractors
- Negotiate Upfront: Push for carve-outs when the owner or third parties cause delays.
- Document Everything: Keep detailed daily logs of delays, causes, and costs.
- Use Change Orders: When delays impact scope, secure written change orders for compensation.
Bottom Line
No-damages-for-delay clauses are designed to protect owners—but they can devastate contractors. Understanding the risks before signing can make the difference between a profitable job and financial disaster. At JDE Law Firm, PLLC, I help contractors and business owners protect themselves from one-sided contract provisions that courts may or may not enforce.
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