General contractors are increasingly providing subcontractors with form contracts that come with schedules that can be modified “at the general contractor’s discretion,” “at the owner’s convenience” or “per the plans and specifications” instead of on a set timeframe. Subcontractors should understand what these provisions look like and understand that agreeing to one likely waives a right to delay damages.
What do these provisions look like?
These provisions can take many forms, including:
- agreeing to perform the work “in accordance with the project schedule developed by the prime contractor”;
- a general provision that places the general contractor in control of the schedule (and does not limit the general contractor’s authority over the schedule);
- provisions that suggests that the schedule may change (and does not immediately include a provision regarding how the subcontractor will be paid for changes);
- provisions that confirm the work will have to be done at the owner’s convenience;
- a provision allowing the prime contractor the right to modify a subcontractor’s work schedule;
- a provision agreeing to perform the work “as directed by the prime contractor” and/or agreeing to complete the entire project “according to the plans of the prime contractor”;
- provisions acknowledging that the job completion date might be extended;
- provisions affirming that the subcontractor agrees to “the owner’s actions in preparing the site”; and
- provisions where there is not a fixed start date.
What is the logic behind these provisions?
General contractors are responsible for coordinating a project and usually bear the risk associated with coordinating operations and schedules between the owner, subcontractors and suppliers. As such, general contractors are often left in litigation or to otherwise monetarily account for schedule delays that happened though no fault of their own. These provisions effectively acknowledge that changes to the project schedule are and were anticipated by the parties, the prime contractor has the right to set the schedule, and the subcontractor is waiving their right to collect for such a delay. That being said, there are usually two exceptions that would still allow a subcontractor to recover in spite of one of these provisions:
- there is an affirmative or positive interference by the owner with the contractor’s work or
- there is a failure on the part of the owner to act on some essential manner necessary to the prosecution of the work.
What do these provisions mean for subcontractors?
Subcontractors need to beware of these provisions. Unlike “no damage for delay” provisions, which more clearly make the subcontractor aware that they are waiving their right to delay damages, the instant provisions are usually not stated as clearly so a subcontractor is likely less aware that they are waiving their right to delay damages. Subcontractors who are unsure of whether a particular provision is waiving the right to delay damages should discuss the provision with the general contractor and ensure that any understanding regarding their right to delay damages gets incorporated into the written agreement.
