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A "No Damages for Delay" Clause Between a General Contractor and its Subcontractor Will Not Bar Recovery for Loss of Productivity Damages.

In a recent Massachusetts Superior Court decision, the judge narrowly construed a standard "no damages for delay" clause in a subcontract thereby allowing the subcontractor to recover certain damages. A typical clause of this type provides that the sole remedy for any delay caused by the general contractor would be an extension of time by which the subcontractor's work must be completed. In most cases, this will be an absolute bar to any subcontractor claim for damages.

However, in Central Ceilings, Inc. v. Suffolk Construction Company, Inc., the subcontractor asserted that it was not seeking compensation for delay, but rather for the additional resources it had to expend to address hindrances and interference caused by the general contractor's mismanagement. The subcontractor was able to complete the work on time; however it sought damages for the costs incurred over and above its initial budget. In essence, the subcontractor was allowed to bring a claim for damages not for the delay itself, but for the consequences of disruption on the project including the acceleration costs trying to meet the schedule.

General contractors should now be aware that by insisting on timely performance, where there has been some disruption on their part, the subcontractor may be able to pursue damages, notwithstanding a "no damages for delay" clause.

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