Owner's Waiver of Completion Date

Normally, when a contractor's performance under a construction contract is delayed, the owner may seek damages arising from such delay. However, if the owner has waived the agreed-upon completion date, he may not later seek damages based on the contractor's failure to complete performance on such date. To determine whether a waiver has occurred, courts will examine all the surrounding circumstances, including the actions and inaction of the owner.

Consider the owner who continues to pay the contractor despite the contractor's delayed performance. A court could infer that the owner intended to waive the completion date because he continued to pay the contractor for three months after the completion date instead of utilizing available remedies for delay at his disposal. In contrast, other courts have been less willing to find that a waiver was intended. For example, even though a new construction schedule with updated completion dates was issued to the contractor, it was held that such occurrence did not obviate the original completion dates.

As protection against the inference of waiver, owners may include language in the construction contract advising that the owner at no time intends to waive the completion dates set out in the contract. Additionally, if the contractor is allowed to remain on the job after the completion date has passed, the contractor should be notified (preferably in writing, and on more than one occasion) that continued tolerance of his presence on the job does not evidence the owner's intent to waive the contractual completion dates or any rights associated with the contractor's delayed performance. If a court does find that the agreed-upon completion dates have been waived, it is likely that it will calculate a "reasonable" time for completion and proceed from there.