5.3.1.4.6.2 No Damage for Delay Clauses.

• Jurisdiction: Arizona

Frequently, construction contracts contain a provision that seeks to exculpate the owner from payment of any delay damages, including those caused by the owner. These provisions are known in the construction industry as a “no damage for delay clause.” A “no damage for delay clause” typically provides that in the event of a delay, the contractor will only be entitled to a time extension, and will specify that the contractor cannot recover any damages for delay. As a general rule, the courts will universally recognize and enforce the “no damage for delay clause” because these types of exculpatory clauses were agreed upon by the parties at the contract stage as a policy of risk allocation.^[93] However, the courts tend to strictly construe these types of exculpatory provisions and only apply them where the allocation of risk was clear and unambiguous.^[94]

“No damage for delay” clauses have no standard language or unique language that is universally used. They appear in a wide variety of forms and contexts which may be very broad or general in language or very specific as to the types of delays for which there may be monetary relief. Due to the wide variety in the wording of such clauses, the Courts have attempted to construe these clauses in various complex factual settings—and these fact intensive decisions have unfortunately led to a bewildering array of cases which at times appear to be inconsistent, confusing, and in many cases have led to unusual and/or inequitable results. However, the common thread of the intent of most of these clauses is to convert an event that may customarily be deemed a “compensable delay” into only an...