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Initially, courts dealt with a dearth of sophistication when determining the responsibility for the concurrent delay in the assessment of liquidated damages. Courts have now been permitting the assessment of liquidated damages, even where there are both Contractor and Owner-caused delays. Critical Path Method (CPM) scheduling software—aided by expert testimony—made a change in approach and willingness to use complex scheduling possible. Courts have tended to award liquidated damages with reasonable certainty when caused by the Contractor.
The Owner's Defense
Owners have recently deployed procedural arguments to limit a Contractor’s ability to raise the defense of concurrent delay when opposing assessments of liquidated damages. The bases for many of these arguments are contained in the contractual terms and conditions, including, but not limited to, notice and claim submission requirements being utilized to bar the defense of the Owner-caused delay. The contractual terms and conditions are intended to provide Owners with the opportunity to mitigate damages associated with a Contractor’s claim of concurrent delay.
The trend in recent court holdings has sided with Owners and enforced such contractual provisions. The “No Damage for Delay” clause is the most frequently-used contract provision by Owners. In such an event, Contractors would be precluded from relying on the defense of concurrent delay when opposing the assessment of liquidated damages. Furthermore, Owners may recover liquidated damages—including amounts for Owner-caused delays—when Contractors fail to follow procedural contract provisions to preserve their defenses if any.
The Contractor's Defense
In light of the courts tending to side with Owners in connection with the assessment of liquidated damages, Contractors need to be prepared in order to protect their ability to rely on the defense of concurrent delay when confronted by the possible assessment of liquidated damages. It is imperative to begin with a thorough review as well as a complete and full understanding of all the relevant contractual provisions. Careful attention should be paid to the contract terms and conditions as they relate specifically to delay, notice, and project completion.
Generally, attention should be paid to the requirements for any type of claim submission. All these provisions will most likely impact the assessment of liquidated damages. With the complexity in the terms and conditions of today’s construction contracts, it would be prudent for even the most experienced Contractors to seek the advice of legal counsel. This is especially true in connection with bonded contracts since the surety’s principal and indemnitors are ultimately liable for any loss the Surety may incur, including those for liquidated damages.
Unfortunately, just knowing key claims in conjunction with scheduling and liquidated damages provisions is not always enough. An in-depth understanding of the contractual requirements must be accompanied by strict compliance with those procedures.
Conclusion
Although there is not a guarantee that the defense of concurrent delay will survive in a court of law, the Notice requirements for delays and time extension submissions should be identified in the contract. Regardless of a Contractor’s intent to seek compensation for the Owner-caused delay, the procedures must be strictly adhered to in order to potentially preserve the concurrent delay defense should the Owner assess liquidated damages at the end of a project. It should be noted that with recent court decisions tending to favor Project Owners, the safest route for Contractors is a stringent observation of all contractual requirements when project delays are encountered.
If you have further questions about concurrent delays or liquidated damages and how they play a role in your claim, reach out to TSIB today! You may also download the Committed to our Clients brochure below to learn more about TSIB's experience, history, and our drive to create successful outcomes for our clients.
