How to Draft a Contract Clause Dealing With Delay in Performance

This article was written by Jennifer Mueller, JD. Jennifer Mueller is an in-house legal expert at wikiHow. Jennifer reviews, fact-checks, and evaluates wikiHow's legal content to ensure thoroughness and accuracy. She received her JD from Indiana University Maurer School of Law in 2006.

This article has been viewed 92,097 times.

Clauses dealing with delays in performance come up most often in construction contracts. A construction project, whether building a single-family home or a massive sports stadium, involves multiple stages that must be completed on time. A delay at any point can mushroom into significantly larger and more costly problems later on, which makes it crucial that the parties agree on the consequences of delays before the work begins.

Method 1 of 4:

Specifying Dates and Schedules for Completion

Step 1 Specify deadlines for performance of all stages of the agreement.

Step 2 State that delays at any stage constitute a material breach of the contract.

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Step 3 Define what sorts of delays are included under the clause.

Step 4 Decide whose performance falls under the clause.

Decide whose performance falls under the clause. 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.

Step 5 Require as much advance notice as possible in the event of a delay.

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Accounting for Major Forces and Excusable Delays

Step 1 List the types of events included in a “force majeure” clause.

Step 2 Decide what will happen if one of these events occurs.

Step 3 Consider including other excusable delays.

Step 4 Provide for cancellation of the contract without penalty if the event continues beyond a specified period of time.

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Penalizing Inexcusable Delays

Step 1 Include a clause that allows performance to be accelerated to meet the schedule despite delays.

Step 2 Provide for liquidated damages in the event performance is delayed and deadlines aren’t met.

Step 3 Allow a party to terminate the agreement if there are excessive delays.

Allow a party to terminate the agreement if there are excessive delays. Drafting a contract involves planning for all contingencies, so consider including a clause that allows the owner to escape the contract in a worst-case scenario where the contractor is responsible for repeated and significant inexcusable delays. [14] X Research source

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Avoiding Liability for Delay

Step 1 Allow the owner to suspend or delay work without paying compensation through a “suspension of work” clause.

Step 2 Check to make sure a “no damage for delay” clause is enforceable in your state.

Step 3 Include a statement.

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How Do You Write a Penalty Clause In a Construction Contract?

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  1. ↑https://real-estate-law.freeadvice.com/real-estate-law/construction/construction-delays-protecting-your-rights.htm
  2. ↑https://real-estate-law.freeadvice.com/real-estate-law/construction/construction-delays-protecting-your-rights.htm
  3. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  4. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  5. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  6. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  7. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
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  1. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  2. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  3. ↑https://www.lawinfo.com/resources/business-law/common-contract-terms-explained.html
  4. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  5. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  6. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142
  7. ↑https://www.lorman.com/resources/resolving-problems-and-disputes-on-construction-projects-tackling-contract-performance-delays-15142

About This Article

Written by: Doctor of Law, Indiana University

This article was written by Jennifer Mueller, JD. Jennifer Mueller is an in-house legal expert at wikiHow. Jennifer reviews, fact-checks, and evaluates wikiHow's legal content to ensure thoroughness and accuracy. She received her JD from Indiana University Maurer School of Law in 2006. This article has been viewed 92,097 times.

39 votes - 85% Co-authors: 10 Updated: May 15, 2024 Views: 92,097 Categories: Legal Drafting

When writing a construction contract, you’ll need to lay out the conditions of performance delays to protect both parties. Set out deadlines for all the stages in the agreement and detail what should be completed. If it’s crucial that stages are completed at certain times, include a clause stating that delays at any stage constitute a material breach of the contract. This is important if other contracts are reliant on deadlines in this contract, and will make the contractor liable if the project is delayed due to their performance. Include a force majeure clause, which excuses performance if a major event outside of your power causes delays, like a natural disaster, war, riot, or strike. You should also write a clause that allows performance to be accelerated to meet the schedule despite delays. This will allow the owner to sue for damages if they need to hire extra staff to meet a deadline. For more advice from our Legal co-author, including how to account for liquidated damages in a contract, read on.

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