FORCE MAJEURE CLAUSE IN NYCHA’S CONTRACT PRECLUDES RECOVERY OF DELAY DAMAGES DUE TO COVID
Updated: Apr 15, 2022
In March 2022, a trial court in New York dismissed a contractor’s claim against NYCHA for delay damages stemming from Covid-19 under the Force Majeure clause contained in NYCHA’s standard general conditions. M.S.T. General Construction Restoration, Inc., v. New York City Housing Authority, 2022 NY Slip Op 30733 (u) (Sup. Ct. N.Y. County 2022).
The provision provided that the contractor “would not be terminated or charged with damages due to delay where ‘the delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of [plaintiff]’, including acts of God and quarantine restrictions. The clause further provided that in such cases, all that the contractor was entitled too was a time extension.
The court rejected the contractor’s argument that it should be entitled to delay damages despite this clause since “neither party could have predicted or contemplated the coronavirus pandemic”. In rejecting this claim the court ruled that because the clause specifically referenced “quarantine restrictions” the parties did, in fact, contemplate that a pandemic may delay the project and that in such event the contractor was restricted to an extension of time, which NYCHA granted.
While it is unknown at the time of this article whether this decision will be appealed it is significant as it appears to be the first reported decision in New York wherein a court has ruled upon a contractor’s entitlement to delay damages arising from Covid-19 on a public works project. Whether on public or private projects, contractors should review their contracts to determine the precise language contained in any Force Majeure provision and/or “no damages for delay” clause as it will most likely determine whether delay damages will be recoverable stemming from Covid.
About the author: George Marco is an attorney practicing in the field of construction law. He also holds a Bachelor of Science in Mechanical Engineering and was previously employed as a Project Manager for a public improvement contractor.
Disclaimer: This article is for informational purposes only and not intended to serve as legal counsel.