- Building & Construction Southwest: Lessons to Be Learned
- June 19, 2009 | Author: Laurin D. Quiat
- Law Firm: Baker & Hostetler LLP - Denver Office
According to Quiat, "Colorado courts since last year have recognized 'no damages for delay' clauses in construction contracts as generally valid and enforceable. This decision comes as no surprise to construction companies that have included these clauses for many years on the assumption that they would be enforceable. However, the Colorado Court of Appeals announced in the same 2008 opinion that Colorado would recognize an exception that nullifies the clause and allows contractors to recover damages when there has been 'active interference' by the owner or general contractor. The court of appeals case, Tricon Kent Co. v. LaFarge North America, illustrates a typical scenario where the enforceability of a no-damages provision is called into question, as well as the application of the newly recognized exception for active interference."
Quiat's article goes on to detail the circumstances in the Tricon case, noting that "although Colorado courts have not yet explicitly recognized the validity of other exceptions to the enforceability of no-damages clauses, the analysis in Tricon seems to indicate that the fraud, misrepresentation and bad faith exceptions may soon be acknowledged to create liability."
Quiat continues: "In the area of 'active interference,' however, there are a number of things that contractors can do to better their chances of recovery for delays in the face of a 'no damages for delay' clause." The article goes on to outline these measures, including documenting every delay or problem attributable to the general contractor and submitting written notice of the problems and delays to the general contractor.
Quiat concludes: "The most important point to take from the Tricon decision is that active interference requires more than casual neglect or lack of attention to problems. Similarly, simple reassurance that problems will be solved is not likely to be considered active interference. However, if the general contractor or owner unreasonably fails to take reasonable and necessary steps for the work to be completed properly, a court may find active interference, which would allow for the recovery of damages despite a 'no damages for delay' clause."