Case Example: ABC Co$.$ v$.$ XYZ Fireproofing Sub.

Statement of Facts

On July $9,1974,$ XYZ Fireproofing Sub entered into a subcontract with prime contractor ABC

Co$.$ to fireproof structural steel as part of the construction of a hospital, in the District of

Columbia, a $$100$ million project. The subcontract amount was $$570,000.$ Article $2($b$)$ of the

subcontract stated that $$No such delay caused by reasons beyond the Subcontractor$$s control

shall give rise to any right to the Subcontractor to claim damages therefore from the contractor.$$

Specification section $9000/6\mathrm{.}6$ provided that $$Ducts$,$ piping or conduit or other suspended

equipment that could interfere with the uniform application of the fireproofing material are to be

positioned after the application of the sprayed fireproofing.$$ XYZ Fireproofing Sub$$s work was

disrupted by ABC Co$.$s delays in ordering and receiving structural steel, from stacking of trades

that caused overcrowding, and when other subcontractors damaged completed work of XYZ

Fireproofing Co$.$ necessitating rework. ABC Co$.$ failed to follow the project schedule because of

the delays in ordering and receiving structural steel that resulted in XYZ Fireproofing Sub.

having to use scaffolding platforms. XYZ Fireproofing Sub had to shift from floor to floor,

rather than completing work on a systematic, scheduled, floor$-$by floor basis. Further, ABC Co$.$

did not provide a reasonably clear and convenient work area to XYZ Fireproofing Sub. ABC Co$.$

failed to reasonably sequence the work to allow XYZ Fireproofing Sub. to perform, and failed to

supervise other subcontractors that ultimately disrupted XYZ Fireproofing Sub$$s work.

Questions:

$1.$ What is a $$No$-$Damages for Delay$$ clause in a contract? How does it transfer risk from

an owner to a contractor or from a contractor to a sub$-$contractor? Discuss.

$2.$ Using the flowchart $($Figure $1$ below$)$ for making decisions on $$no$-$damage$-$for$-$delay

clause$$ discuss how the courts would rule in the case provided above? State your

decision with valid reasons.

Fig. $1$: Decision flowchart for no$-$damage$-$for$-$delay clause