A delay claim is made by one party to a contract, against another party to the contract, for the second party’s failure to carry out the contract in a timely manner, or for otherwise holding up the contract. For example, a landlord could have a delay claim against a contractor for failing to complete a project on time, resulting in lost rents. On the other hand, the contractor may have its own delay claim against the landlord for a variety of delay events. For contractors, delay claims may arise out of stop work orders, shortages of labour, shortages of supplies or unforeseen events. With the current COVID-19 epidemic and the Government of Ontario’s recent order that certain types of construction projects shutdown, there will undoubtedly be delay claims.
It is important to review the terms of the contract because there may be specific provisions dealing with delay claims. One type of provision is the requirement to provide timely notice of the delay. Construction contracts typically require an enumerated number of days of notice after the commencement of the delay event. Failure to adhere to the notice provisions may disqualify a delay claim. There may be provisions for the extension of time to perform the contract with or without compensation, depending on the delay causing event, provided that the claimant gives proper notice.
Parties should carefully review the terms of contracts and, if appropriate, send out delay claim notices as soon as possible.