By Attorney Edward Jesson
Delays in construction are often unavoidable. This rang especially true over the last few years while the world has been dealing with the COVID-19 pandemic. Contractors have had to deal with material shortages, price increases, and difficulty finding labor, among many other issues. However, legal issues tend to arise when those delays start costing people involved in the project money.
The first thing to look at when evaluating whether you may have a claim for delay damages is the construction contract. Most contracts address delays, though the level of specificity will vary greatly. Generally speaking, the parties will be bound to whatever the contract says with regards to delay damages. Assuming that delay damages are recoverable, the burden is on the party claiming those damages to show: (1) what caused the delay; (2) that the person or entity claiming the damages was in no way responsible for the delay; and, (3) that the damages requested were, in fact, caused by the delay.
Under North Carolina law, delay damages can, for the most part, be quite easily categorized. For example, there are excusable and non excusable delays. Generally, excusable delays will be delays caused by circumstances outside of the contractor’s control—COVID-19 being a great example. An example of a non excusable delay is failure to properly schedule and coordinate the work. In most instances, parties will not be able to make a claim for excusable delays and may be able to make a claim for non-excusable delays.
There are also compensable and non compensable delays. A compensable delay would be a delay caused by circumstances within the control of the owner but not the contractor making the delay claim. For example, failure of the owner to provide materials which were required to be purchased by the owner which causes a delay in construction could be considered compensable delay—one that would entitle the contractor to additional time to complete the project or, under certain circumstances, monetary damages. Non compensable delays are, under most circumstances, going to be delays that do not allow anyone claim for monetary damages.
Of course, in order to make a claim for monetary damages from a delay you have to show that you have suffered actual financial damages. Examples of monetary delay damages could be an owner’s lost profits from not being able to open a business on time, or increased material costs due to a delay from the contractor. Examples of monetary damages for a contractor may include the costs of idle equipment and labor, extended project overhead, and potentially lost profits from jobs that the contractor could not take due to delays caused by the project owner.
There are many other aspects to delay damages under North Carolina law—many of which can be costly to owners and contractors alike. The good news is that many of these risks can be mitigated using effective contractual language. If you are curious whether your business is protected or if you have a delay issue, don’t hesitate to give the attorneys at Jesson & Rains a call.
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