In the world of construction law, “no damages for delay” clauses are commonly used in contracts to limit liability. These provisions generally state that if delays occur, the affected party’s sole remedy is a time extension—not monetary compensation. However, a recent federal case highlights the important reality that these clauses are not absolute.
Case in Point: A Subcontractor’s Claim Moves Forward
In a recent dispute involving a college dormitory construction project, the general contractor, Pike, brought a claim against its subcontractor, Tri-Krete, which had been hired to provide precast concrete walls. In response, Tri-Krete filed counterclaims asserting that Pike’s mismanagement and interference significantly disrupted their work, resulting in substantial added costs.
Pike moved for summary judgment, citing a “no damages for delay” clause in the subcontract. That clause specified that delays caused by the contractor would entitle the subcontractor only to schedule extensions—not financial compensation—and that Tri-Krete waived any rights to seek damages due to interference, delay, or sequencing changes.
Despite the language in the contract, the court allowed Tri-Krete’s claim to proceed. Why? Because there are well-established exceptions to these types of clauses that prevent their enforcement in cases involving:
- Bad faith or willful misconduct
- Uncontemplated or extraordinary delays
- Gross negligence
- Intentional contract abandonment
- Breach of a fundamental obligation of the contract
Tri-Krete alleged that Pike interfered with its work by failing to coordinate necessary prerequisites, forcing disruptive changes to production methods, and drastically compressing the project schedule—cutting it nearly in half. The court found that these allegations raised material issues of fact, allowing the case to go to trial.
South Carolina’s Position on Delay Clauses
South Carolina courts generally uphold “no damages for delay” provisions, provided they comply with the state’s standard rules for valid contracts. However, similar to the federal case discussed above, South Carolina recognizes key exceptions.
These include:
- Fraud, misrepresentation, or bad faith by the party enforcing the clause
- Active interference with the performance of the contract
- Unreasonable delays that justify contract abandonment
- Delays caused by gross negligence
As emphasized in U.S. ex rel. Williams Elec. Co. v. Metric Constructors, Inc., courts in South Carolina enforce these provisions unless one of the recognized exceptions applies. If a contractor or subcontractor can demonstrate that they were hindered in one of these ways, they may still recover damages—despite the presence of a delay clause.
Protecting Your Rights in Construction Disputes
Contractors and subcontractors should be diligent in documenting delays, providing timely notice, and preserving records that demonstrate interference or mismanagement.
Courts require proof that the party seeking damages:
- Can identify who was responsible for the delay
- Can show how those delays impacted contract completion
- Suffered actual damages from those delays
- Can offer a rational basis for estimating those damages
While a precise calculation isn’t always required, a reasonable framework must be provided.
How The Floyd Law Firm PC Can Help
At The Floyd Law Firm PC, we provide knowledgeable legal guidance and effective representation in all areas of business and construction litigation. We work to protect your rights—whether through negotiation or litigation—so that you can stay focused on running your business.
With over five decades of experience serving clients throughout South Carolina, our legal team handles a wide range of commercial and contractual disputes, including:
Business Litigation & General Trials
Construction Disputes
Real Estate Litigation
Breach of Contract Resolution
When a construction dispute threatens to derail your project or financial future, having an experienced legal advocate by your side is essential. We’re here to help you find the most strategic, cost-effective solution possible.
