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Overly Restrictive Delay Damages Clause Falls Apart In Court

Thursday, December 04, 2008 04:36 pm

Overly Restrictive Delay Damages Clause Falls Apart In Court

The difference between a no-damages-for-delay clause and one that simply limits delay damages may not be as wide as you think. If limits are overly restrictive, they're not likely to stand up in court -- at least not in Illinois.

Subcontractor Gurtz Electric Company (Gurtz) filed suit against contractor Gilbane Building Company (Gilbane) after encountering delays that hindered its performance on a U.S. Government Services Agency (GSA) building project in Chicago. Gurtz claimed it was unable to complete its work by the agreed-upon completion date because Gilbane: furnished defective plans/specifications, demanded work different from/additional to subcontractrequired work, interfered with access to the site, failed to coordinate with other subcontractors/suppliers so that Gurtz could perform efficiently, and was uncooperative. Plus, Gilbane refused to provide Gurtz with time extensions, which the subcontractor requested per the subcontract.

Gurtz sought $2 million in additional labor and supervision costs due to Gilbane's alleged contract breach.

Exceptions apply to limitation clause too, not just no-way clause

Gilbane fought back by arguing that the subcontract barred [...]

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