MSBCA Strictly Enforces No Damages for Delay Clause

One of the most common pieces of advice that I give clients and prospective clients is to read and understand the documents that they sign.  Time and time again, it seems that sophisticated business people fail to read and understand important terms and clauses in their contracts.  It is only when a dispute arises that they realize the import of the provisions to which they agreed. 

A recent case before the Maryland State Board of Contract Appeals yet again illustrates the importance of understanding contractual limitations and waivers.  In that case, which can be found here, the state contract contained a “no damages for delay” clause, which barred an approximate $1,000,000 delay claim.

The contract entered into by the design-build contractor provided for the relocation of several overhead and underground utilities by the respective utility companies.  When this did not happen during the anticipated timeframe, the contractor claimed a critical path delay and requested additional compensation in the approximate amount of $1,000,000 and a 187-day extension.  Relying on the no damages for delay provision, which stated that “no additional compensation will be allowed for delays, inconvenience or damage sustained by him due to any interference from the said utility appurtenances or the operation of moving them,” the procurement officer denied the contractor’s claim.

Before the Board, the contractor argued that the no damage for delay provision did not apply because the state misrepresented certain facts concerning the utilities in the contract. By way of background, the contractor correctly pointed out that no damage for delay provisions are generally unenforceable where (a) there is intentional wrongdoing or gross negligence, or (b) fraud or misrepresentation on the part of the agency asserting the clause.

The Board upheld the PO’s decision, ruling that the contractor did not provide admissible evidence demonstrating any misrepresentation sufficient to set aside the unambiguous waiver.

This case is yet another example of the importance of understanding contractual provisions when significant claims are possible, and especially when a contractor relies on third parties outside of its control. While hindsight is always 20/20, the contractor here assumed the risk of the utilities not relocating their equipment on schedule, and waived any damages resulting from those delays. 

 The case is In the Appeal of Allan Myers MD, Inc., MSBCA Docket No. 3143.