How to Draft a Contract Clause Dealing With Delay in Performance
Specify deadlines for performance of all stages of the agreement., State that delays at any stage constitute a material breach of the contract., Define what sorts of delays are included under the clause., Decide whose performance falls under the...
Step-by-Step Guide
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Step 1: Specify deadlines for performance of all stages of the agreement.
Many courts won’t award damages for delay if your contract doesn’t have a specified end date, or particular deadlines for each phase of the project.In the absence of specific dates of completion, contract law requires work to be completed in a reasonable amount of time.
However, what is considered “reasonable” could vary widely from person to person.For each deadline, you should detail exactly what you expect to be finished by that date.
For example, suppose you’re building your dream home and have hired a contractor.
His first deadline is to clear and grade the lot and pour the foundation.
He must be finished by May 30 because the materials for the framing of the house are being delivered June
1.
Sometimes it’s not necessary for a phase to be completely finished before another begins, but it needs to be mostly completed.
If this is the case, make sure you define exactly what constitutes substantial completion for the purposes of your contract.
For example, your contractor needs to have the plumbing and electricity completed before the interior doors and trim are installed.
However, he doesn’t have to be 100 percent finished because he can finish up his work on the first floor while the doors and trim are installed on the second floor.
When you have a project with multiple phases, the most important thing is to make sure that later phases aren’t pushed back because an early phase takes too long to complete.
You might also consider including a sentence requiring the contractor use specific scheduling methods to track his progress and ensure the deadlines of all phases are met, or to provide weekly or monthly status reports. -
Step 2: State that delays at any stage constitute a material breach of the contract.
A material breach goes to the very core of the contract, meaning if the schedule isn't met the contract might as well not even exist.This sort of clause typically is called a "time is of the essence" clause.
By saying time is of the essence, you’re saying that the deadlines and schedules included in the contract are of absolute importance to its existence.
Absent any other clause regarding a delay in performance, if you include a provision that time is of the essence, the contractor will be liable for all damages resulting from a delay, even if the delay was not his fault., Generally speaking, you don’t want to include delays that are caused by third parties, by events outside the control of either the owner or the contractor, or delays that happen because the owner changes his mind regarding something like a schedule of events or a type of material.A “time is of the essence” provision typically states that all delays are included unless excluded elsewhere in the contract.
This way you can draft other clauses to deal more specifically with various types of delays that may come up over the course of the contract. "Time is of the essence" clauses don't have to be complex.
For example, your clause might simply say: "Time is of the essence with respect to all provisions within this Agreement.
Any delay in performance by either party shall constitute a material breach of this Agreement."
A “time is of the essence” clause can apply solely to the contractor, or can apply to the owner’s responsibility to provide the contractor with timely payments and materials as well. , All parties should be required to notify each other if even an excusable delay occurs.
How much notice should be provided may depend on the reason for the delay or the length of the delay.
For example, if the contractor learns key building materials have been back-ordered and won't be delivered for three weeks, he should alert the owner as soon as he finds that out rather than waiting to see what happens.
The owner may want to pull the order or find a different supplier, and he needs as much time as possible to pursue alternatives.
On the other hand, if severe thunderstorms mean the contractor has to suspend work for an afternoon but plans to return the next morning, a phone call to the owner as he sends the workers home is probably sufficient.
Contractors may forfeit any damages or right to ask for an extension of time under the contract if they fail to give the owner proper notice.
If the owner’s actions have caused the delay, a court may refuse to award the contractor damages unless the contractor gave the owner proper notice.
Without notice, it’s possible the owner didn’t realize that he was causing a delay, and in any event he hasn’t been given the opportunity to correct the problem.Contractors should keep a daily log of project conditions and events so they can notify the owner of any potential for delay as soon as possible. -
Step 3: Define what sorts of delays are included under the clause.
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Step 4: Decide whose performance falls under the clause.
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Step 5: Require as much advance notice as possible in the event of a delay.
Detailed Guide
Many courts won’t award damages for delay if your contract doesn’t have a specified end date, or particular deadlines for each phase of the project.In the absence of specific dates of completion, contract law requires work to be completed in a reasonable amount of time.
However, what is considered “reasonable” could vary widely from person to person.For each deadline, you should detail exactly what you expect to be finished by that date.
For example, suppose you’re building your dream home and have hired a contractor.
His first deadline is to clear and grade the lot and pour the foundation.
He must be finished by May 30 because the materials for the framing of the house are being delivered June
1.
Sometimes it’s not necessary for a phase to be completely finished before another begins, but it needs to be mostly completed.
If this is the case, make sure you define exactly what constitutes substantial completion for the purposes of your contract.
For example, your contractor needs to have the plumbing and electricity completed before the interior doors and trim are installed.
However, he doesn’t have to be 100 percent finished because he can finish up his work on the first floor while the doors and trim are installed on the second floor.
When you have a project with multiple phases, the most important thing is to make sure that later phases aren’t pushed back because an early phase takes too long to complete.
You might also consider including a sentence requiring the contractor use specific scheduling methods to track his progress and ensure the deadlines of all phases are met, or to provide weekly or monthly status reports.
A material breach goes to the very core of the contract, meaning if the schedule isn't met the contract might as well not even exist.This sort of clause typically is called a "time is of the essence" clause.
By saying time is of the essence, you’re saying that the deadlines and schedules included in the contract are of absolute importance to its existence.
Absent any other clause regarding a delay in performance, if you include a provision that time is of the essence, the contractor will be liable for all damages resulting from a delay, even if the delay was not his fault., Generally speaking, you don’t want to include delays that are caused by third parties, by events outside the control of either the owner or the contractor, or delays that happen because the owner changes his mind regarding something like a schedule of events or a type of material.A “time is of the essence” provision typically states that all delays are included unless excluded elsewhere in the contract.
This way you can draft other clauses to deal more specifically with various types of delays that may come up over the course of the contract. "Time is of the essence" clauses don't have to be complex.
For example, your clause might simply say: "Time is of the essence with respect to all provisions within this Agreement.
Any delay in performance by either party shall constitute a material breach of this Agreement."
A “time is of the essence” clause can apply solely to the contractor, or can apply to the owner’s responsibility to provide the contractor with timely payments and materials as well. , All parties should be required to notify each other if even an excusable delay occurs.
How much notice should be provided may depend on the reason for the delay or the length of the delay.
For example, if the contractor learns key building materials have been back-ordered and won't be delivered for three weeks, he should alert the owner as soon as he finds that out rather than waiting to see what happens.
The owner may want to pull the order or find a different supplier, and he needs as much time as possible to pursue alternatives.
On the other hand, if severe thunderstorms mean the contractor has to suspend work for an afternoon but plans to return the next morning, a phone call to the owner as he sends the workers home is probably sufficient.
Contractors may forfeit any damages or right to ask for an extension of time under the contract if they fail to give the owner proper notice.
If the owner’s actions have caused the delay, a court may refuse to award the contractor damages unless the contractor gave the owner proper notice.
Without notice, it’s possible the owner didn’t realize that he was causing a delay, and in any event he hasn’t been given the opportunity to correct the problem.Contractors should keep a daily log of project conditions and events so they can notify the owner of any potential for delay as soon as possible.
About the Author
Denise Clark
A passionate writer with expertise in pet care topics. Loves sharing practical knowledge.
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