When an owner delays a job, the contractor's costs keep running: extended general conditions, idle crews and equipment, escalation, and the cost of accelerating to recover the schedule. A no-damages-for-delay clause decides who pays for them. This guide expands the delay section of our construction contract review checklist.
What the clause does
Without one, the common law lets a contractor recover damages for delays the owner causes. The parties can contract around that. In the Texas Supreme Court's words, a contractor "may agree to excuse the owner from liability for delay damages, even when the owner is at fault" (Zachry Construction v. Port of Houston Authority, 2014). A no-damages-for-delay clause is that agreement: a time extension becomes your only remedy. Here is one version, in our own illustrative drafting:
Contractor's sole remedy for any delay, hindrance or interference, from any cause whatsoever, including acts or omissions of Owner or its consultants, shall be an extension of the Contract Time. Contractor shall have no claim for damages or additional compensation on account of any such delay.
Don't confuse it with a force majeure or excusable-delay clause. Those cover events outside both parties' control, such as severe weather or labor disputes, and usually grant time without money. A no-damages-for-delay clause goes further: it bars money even when the owner, its architect or its other contractors cause the delay.
Watch for disguised versions: a clause that makes a time extension the "exclusive remedy" for delay, change-order terms that allow time but no cost for owner-caused delay, or a cap on delay damages so low it amounts to the same thing.
Exceptions courts recognize
New York's highest court laid out the exceptions in one place. A clause exculpating an owner from delay damages is "valid and enforceable," but even with one, a contractor may recover damages for:
- delays caused by the owner's bad faith or its willful, malicious or grossly negligent conduct;
- delays not contemplated by the parties;
- delays so unreasonable that they amount to the owner's intentional abandonment of the contract; and
- delays resulting from the owner's breach of a fundamental obligation of the contract.
(Corinno Civetta Construction v. City of New York, 1986.) The same opinion explains why the drafting matters: even broadly worded clauses are generally held to cover only delays that are reasonably foreseeable, arise from the contractor's own work, or are mentioned in the contract. That cuts both ways. Delays nobody could foresee may fall outside the clause, but an owner that lists specific delay causes in it, such as utility relocations, permit timing or work by separate contractors, makes those delays "contemplated" and much harder to recover for.
Texas reached a similar result in Zachry. The jury found the port's delay resulted from "arbitrary and capricious conduct, active interference, bad faith and/or fraud," and the court held the clause did not bar the contractor's delay claim. It noted that before the case, most American jurisdictions, including five state legislatures, had refused to let these clauses shield an owner that deliberately and wrongfully interferes with the work. Four justices dissented.
The exceptions are real but narrow, and proving them means litigating the owner's conduct and motives. Where courts enforce the clause, ordinary owner negligence generally isn't enough: Zachry says the contractor assumes that risk. Plan on the clause meaning what it says.
States that limit them by statute
Some legislatures have taken the question out of the courts' hands, mostly for public work. Examples:
| State | Scope | Rule |
|---|---|---|
| California Pub. Cont. Code § 7102 | Public agency contracts and their subcontracts | A time-only clause doesn't bar damages for delay the owner (or, in a subcontract, the contractor) is responsible for, if the delay is unreasonable and not within the parties' contemplation. Agencies can't require a waiver. |
| Missouri RSMo § 8.962 | State and local public works (MoDOT excluded) | Void when the delay is caused in whole or in part by acts or omissions within the public entity's control. |
| New Jersey N.J.S.A. 2A:58B-3, 40A:11-19, 18A:18A-41 | State entities, local units, school boards | Void to limit the remedy to a time extension for delay caused by the public entity's negligence, bad faith, active interference or other tortious conduct. The local and school statutes add other reasons the parties didn't contemplate. |
| North Carolina G.S. 143-134.3 | State and local public construction | Language forbidding or limiting damages for delays caused solely by the owner or its agent can't be enforced. |
| Ohio R.C. 4113.62(C) | All construction contracts and subcontracts for Ohio real estate | Void when the delay is a proximate result of the owner's act or failure to act. In subcontracts, the owner's or the contractor's. |
| Oregon ORS 279C.315 | Public improvement contracts | Void for unreasonable delay caused by the contracting agency. |
| Virginia Va. Code § 2.2-4335 | Public construction contracts | Void for unreasonable delay caused by the public body within its control. A contractor pays a share of the agency's costs for any part of a delay claim found false or baseless, and the agency pays a share of the contractor's costs for any part it denied in bad faith. |
| Washington RCW 4.24.360 | All construction contracts | Void for unreasonable delay caused by the contractee or those acting for it. |
| Arizona A.R.S. § 41-2617, § 34-221(F) | State and local public construction | Not voided, but the contract must provide for negotiating recovery of damages for unreasonable, uncontemplated delay the agency is responsible for. |
Two things to notice. First, Ohio and Washington reach private work too. Second, most of these statutes expressly preserve notice-of-delay requirements, dispute procedures and liquidated damages. The statute won't save a delay claim you lost by missing the contract's notice requirements; see our guide to notice provisions. The list isn't exhaustive, and the law changes; check the project state.
Federal and AIA forms
Federal fixed-price construction contracts take the opposite approach. They must include a Suspension of Work clause (FAR 42.1305). Under it, if the contracting officer's act, or failure to act within the time allowed, suspends, delays or interrupts the work for an unreasonable period, the contract price is adjusted for the added cost, excluding profit. There is no adjustment to the extent another cause, including the contractor's own fault, would have delayed the work anyway, and costs incurred more than 20 days before written notice are generally not allowed (FAR 52.242-14).
AIA A201-2017 has no no-damages-for-delay clause. Section 8.3.1 extends the Contract Time for delays caused by the owner, the architect or a separate contractor, by changes, and by causes beyond the contractor's control, and § 8.3.3 says that section doesn't preclude either party from recovering delay damages under other provisions. If one turns up in an AIA-based contract, it was added by modification, often in supplementary conditions or a rider, so read those as closely as the form.
What to negotiate
- Strike it. Replace it with a clause that gives time and money for owner-caused delay. A201 itself grants time and leaves delay damages available.
- Carve out owner-side causes if it stays: acts or omissions of the owner, its consultants and separate contractors; changes; differing site conditions; owner-ordered suspensions; late approvals, RFI answers and submittal reviews; and late site access or owner-furnished permits.
- A short time-only window. If the owner won't move, accept time only for the first stated number of days of owner-caused delay, with compensation after that.
- Price the compensable delay in advance. A daily rate for extended general conditions, stated in an exhibit, narrows the fight later.
- Make it mutual. If the owner can assess liquidated damages for your delay, ask for delay damages for its delay. See our guide to liquidated damages.
- Settle concurrent delay. Time but no money for concurrent periods, and no liquidated damages for them either.
- Match your subcontracts. If you accept the clause upstream, pass it down to the same extent where state law allows; otherwise subs can claim delay costs from you that you can't recover from the owner. Ohio voids these clauses in subcontracts too.
Illustrative language (our drafting; have counsel adapt it to your state):
If Contractor is delayed by an act or omission of Owner, Owner's consultants or separate contractors, by changes in the Work, by differing site conditions, or by a suspension Owner orders, Contractor shall be entitled to an extension of the Contract Time and an adjustment of the Contract Sum for its reasonable costs caused by the delay, including extended general conditions at the daily rate in Exhibit [__]. For any period of delay concurrent with Contractor-caused delay, Contractor shall receive time but not compensation, and no liquidated damages shall accrue.
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FAQ
Are no-damages-for-delay clauses enforceable?
Generally yes, subject to exceptions. New York's highest court calls them valid and enforceable but allows recovery for delays caused by bad faith or willful, malicious or grossly negligent conduct, uncontemplated delays, delays amounting to abandonment, and breach of a fundamental obligation. Several states, including California, New Jersey, North Carolina, Ohio, Oregon, Virginia and Washington, void or limit them by statute, mostly on public work.
What is the difference between a no-damages-for-delay clause and force majeure?
Force majeure covers events outside both parties' control and usually grants time without money. A no-damages-for-delay clause bars money even for delays the owner causes.
Does a no-damages-for-delay clause protect an owner that actively interferes with the work?
Often not. The Texas Supreme Court held in 2014 that such a clause did not bar a contractor's delay claim where the jury found arbitrary and capricious conduct, active interference, bad faith or fraud, and New Jersey's statutes name active interference expressly.
If my state voids these clauses, do I still need to give notice of delay?
Yes. The statutes generally preserve contract notice requirements, so a late or missing notice can still defeat the claim.
Related guides
- Construction contract review checklist for general contractors
- Liquidated damages in construction contracts
- Notice provisions: how contractors lose valid claims on a technicality
- Retainage in construction contracts: what to check before you sign
Sources
- Corinno Civetta Construction Corp. v. City of New York, 67 N.Y.2d 297 (1986).
- Zachry Construction Corp. v. Port of Houston Authority, 449 S.W.3d 98 (Tex. 2014).
- Cal. Pub. Cont. Code § 7102.
- Mo. Rev. Stat. § 8.962 (formerly § 34.058).
- N.J.S.A. 2A:58B-3; N.J.S.A. 40A:11-19; N.J.S.A. 18A:18A-41.
- N.C. Gen. Stat. § 143-134.3.
- Ohio Rev. Code § 4113.62.
- Or. Rev. Stat. § 279C.315.
- Va. Code § 2.2-4335.
- RCW 4.24.360, 4.24.370.
- A.R.S. § 41-2617; A.R.S. § 34-221.
- FAR 52.242-14, Suspension of Work; FAR 42.1305(a).
- AIA Document A201-2017, §§ 8.3.1, 8.3.3 (paraphrased).
This guide is general information, not legal advice. Delay law varies by state and changes over time. Have a construction attorney licensed in your project's state review your contract before you rely on it.