Contract Duration and Schedule
Most contracts provide a specific delivery schedule. This will leave the contractor in default and liable for delay damages if the completion date is not met.[1] The completion date also provides the contractor a specific time to complete its work and an owner may not shorten this time.[2] A delay in the completion date can result in a contractor claim for price increases.[3] Delay by a general contractor in accepting a bid may release the subcontractor from a bid.[4]
When a contract does not specify a time for performance, the law implies a reasonable time.[5]
Time of the Essence
Most construction contracts will state that “Time is of the Essence.” This is another way of saying that the schedule is a “material term of the contract.” The schedule is important and the parties to the contract expect to enforce it. If the contract does not make time of the essence and there is no required completion date, the work must be completed within a reasonable time.[6] A purchase order with a definite delivery date can make time of the essence for a material supplier.[7]
Force Majeure and Excusable Delays
Most contracts state that a contractor is not responsible for delays from causes beyond the contractor’s control. In fact, some state contractor’s regulations require such an explicit “force majeure” clause in contracts.[8]
Many contractors make the mistake of thinking they are never responsible for delays out of their control, but this is not true. You have to make sure it is in your contract.
In the absence of an “excusable delay” or “force majeure” term in the contract, a time is of the essence clause can leave a contractor liable for damages in the event of delay, even if the contractor did not cause the delay.[9] If your contract has a definite completion date and does not have a “force majeure” term, you can be liable for delay, even if caused by the owner or other third parties.
It may be enough to add the simple statement that “contractor is not responsible for delays from causes beyond the contractor’s control.” Of course, it is even better to add a more developed “force majeure” term stating:
If the Contractor is delayed at any time in the commencement or progress of the Work by an act or neglect of the Owner or Architect, or of an employee of either, or of a separate contractor employed by the Owner, or by changes ordered in the Work, or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor’s control, then the Contract Time shall be extended by Change Order for a reasonable time.
AIA Document A201-2017 (General Conditions of the Contract for Construction) states:
8.3 Delays and Extensions of Time
8.3.1 If the Contractor is delayed at any time in the commencement or progress of the Work by an act or neglect of the Owner or Architect, or of an employee of either, or of a separate contractor employed by the Owner; or by changes ordered in the Work; or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor’s control; or by delay authorized by the Owner pending mediation and arbitration; or by other causes which the Architect determines may justify delay, then the Contract Time shall be extended by Change Order for such reasonable time as the Architect may determine.
This type of force majeure clause entitles a contractor to a time extension only. The contractor is protected from liquidated damage or other claims for delays beyond the contractor’s control, but the contractor’s affirmative claim for compensation for the delay will be controlled by other contract provisions. The ability to even get a time extension is dependent on the terms of the contract, especially timely notice requirements. A time extension clause in a contract does not necessarily provide an exemption from damages for delay.[10]
In order to obtain even a time extension under a force majeure clause, the contractor usually must prove that the delay was truly beyond the contractor’s control and that the delay was unexpected, unusual or out of the ordinary. The essence of an excusable delay is that the cause is unforeseeable, beyond the control of the contractor and without his fault or negligence.[11]
If extensions of time are authorized only for “adverse weather conditions not reasonably anticipated,” a contractor must be ready to prove that the adverse weather conditions were extraordinary.[12]
Unforeseeability is often a difficult element to establish, particularly when delay is caused by a subcontractor or supplier.[13] A subcontractor must sometimes prove that it took all practicable efforts to overcome a delay to establish that the delay was beyond the contractor’s control.[14]
Material Supplier Deliveries
A material supplier must deliver goods within a “reasonable time” if the parties have not agreed on any other schedule.[15] This is vague, but it does mean something. In most markets, it is not reasonable for a lumberyard to deliver two months after an order.
What is reasonable will vary depending on such factors as the nature of goods to be delivered, the purpose for which they are used, the extent of seller’s knowledge of buyer’s intentions, transportation conditions, the nature of the market and so on.[16] A court would look at (1) the course of dealing between the parties; (2) trade usage in the industry; and (3) buyer’s notification to seller of time concerns.[17] A purchase order with a definite delivery date can make time of the essence for a material supplier.[18]
[1] McDevitt & St. Co. v. Marriott Corp., 713 F. Supp 906 (E.D. Va 1989), aff’d in part and rev’d in part 911 F.2d 723 (4th Cir. 1990), on remand 754 F. Supp 513 (E.D. Va. 1991).
[2] M.F. & G. Trading Co. v. Clifford, 200 Va. 744, 107 S.E.2d 441 (1959).
[3] R.G. Pope Constr. Co. v. Guard Rail of Roanoke, Inc., 219 Va. 111, 118-19, 244 S.E.2d 774 (1978).
[4] Piland Corp. v. REA Construction Co., 672 F.Supp. 244 (E.D.Va. 1987).
[5] Appalachian Power Co. v. John Stewart Walker, Inc., 214 Va. 524, 535, 201 S.E.2d 758, 767 (1974).
[6] May v. Martin, 205 Va. 397, 137 S.E.2d 860 (1964).
[7] Kirn v. Champion Iron Fence Co., 86 Va 608, 10 S.E. 885 (1890).
[8] See e.g., Virginia Board of Contractors Regulations, 18 VAC 50-22-260 (B)(9)(d).
[9] Sands v. Quigg, 111 Va. 476, 69 S.E. 440 (1910).
[10] Howard P. Foley Co. v. J.L. Williams & Co. Inc., 622 F.2d 402,407 (8th Cir. 1980).
[11] R.G.Pope Construction Company v. Guardrail of Roanoke, 219 Va. 111, 244 S.E.2d 774 (1978).
[12] McDevitt & Street Co. v. Marriott Corp., 713 F. Supp 906, 915 (E.D. Va 1989), aff’d in part and rev’d in part 911 F.2d 723 (4th Cir. 1990), on remand 754 F. Supp 513 (E.D. Va. 1991) [The delays resulting from the adverse weather conditions were not excused where the precipitation levels were reasonably anticipatable by the contractor; the weather data provided by the contractor did not demonstrate that the higher levels of precipitation for the relevant time period could not have been reasonably anticipated; it should have come as no surprise to the contractor that it rains and snows a good deal during the winter in Northern Virginia; the rain and snowfall in that winter was far from the highest recorded and not so unusual as to have been beyond reasonable anticipation].
[13] See e.g., Electrical Enters., Inc., IBCA 972-9-72, 74-1 BCA #10,400; but see J.D. Hedin Constr. Co. v. U.S., 408 F.2d 424 (Ct. Cl. 1969) [unforeseeability of cement shortage was proven].
[14] McDevitt & Street Co. v. Marriott Corp., 713 F. Supp 906, 915 (E.D. Va 1989), aff’d in part and rev’d in part 911 F.2d 723 (4th Cir. 1990), on remand 754 F. Supp 513 (E.D. Va. 1991). See e.g., Int’l Elecs. Corp. v. U.S., 646 F.2d 496 (Ct. Cl. 1981).
[15] UCC Section 2-309(1).
[16] White and Summers Uniform Commercial Code, Vol 1. Ch. 3 at 126; Am Jur Sales § 268 and Corpus Juris Secondum Sales §170.
[17] Jamestown Terminal Elevator v. Heib, 246 NW.2d 736 (ND, 1976); Schiavi Mobile Homes v. Gagne, 510 A.2d 236 (Maine, 1986) [buyer’s failure to object to date of performance resulted in court concluding that performance had occurred within reasonable time]; Robinson v. Commercial Contractors, 274 A.2d 160 (CT, 1970) [adds intent of the parties to the “facts and circumstances” test, although this case does not address the time issue under the UCC but applies a common law contract standard]; Thornton Construction Co. v. Mackinac Aggregates Corp., 157 N.W.2d 456 (MI 1968) [Court held that time of performance was reasonable based on both parties’ understanding of timing of like projects in the industry].
[18] Kirn v. Champion Iron Fence Co., 86 Va 608, 10 S.E. 885 (1890).