County’s Delay in Issuing Notice to Proceed Does Not Justify Abandonment by Contractor
Kegler Brown Construction Newsletter September 1, 2003
A county let 16 months pass from the date of bid before issuing a Notice to Proceed. As a result, the Contractor demanded price increases and ultimately revoked its contractual obligations and sued for its lost profits.
While the Court acknowledged that there might be valid exceptions to the "no damage for delay" clause such as "delay not contemplated by the parties" or "unreasonable length of delay," the Court of Appeals overturned the trial court and denied the Contractor's recovery stating that the Contractor was not justified in abandoning the contract, but instead should have simply sought damages associated with the extraordinary delay caused by the County.
This case demonstrates the risk associated with abandoning a contract despite excessive delays caused by the owner. Daniel E. Terreri & Sons v. Mahoning Cty. Bd. of Commrs., 152 Ohio App. 3d 95 (2003).
The Court also denied the Contractor's lost profit claim for impaired bonding capacity (such as lost opportunities on other jobs), again demonstrating how difficult it is for contractors to recover such damages. Traditionally Ohio courts have been skeptical of such claims thinking that the damages from lost profits on other jobs that could not even be bid (due to a diminished bonding capacity) are too speculative to be recoverable.