Virginia Code § 2.2-4335 provides that any provision in a public construction contract that purports to waive, release or extinguish the rights of a contractor to recover damages for unreasonable delay caused by the public body is void and unenforceable as against public policy. A provision that provides for liquidated damages for delay, however, is not void under this section.
In Martin Bros. Contractors, Inc. v. Virginia Military Institute, Martin Bros. Contractors (“Martin”) entered into a contract with the Virginia Military Institute (VMI) to renovate a building on campus. As a result of changes requested by VMI, the project was delayed 270 days. Martin claimed $430,242.56 in delay damages, plus the cost of recovery. VMI admitted that Martin was not at fault, but paid only $99,646.20, relying on limitation provisions in the contract that limited recovery for unreasonable delays to site direct overhead costs and excluded certain home and field office expenses. The contract also limited the allowable mark-up for overhead and profit on both additive and deductive changes in the work. VMI argued that these were liquidated damages provisions, permitted by § 2.2-4335. The Supreme Court of Virginia disagreed.
The court concluded that the markup provisions addressed compensation for the owner’s change orders only, and not compensation related to delay. As such, the contract provisions did not establish liquidated damages for delay and, therefore, did not fall within the exception to § 2.2-4335. Because VMI’s contract provisions operated as an absolute bar to most of Martin’s delay damages, they were void and unenforceable as against public policy under § 2.2-4335.
Martin Bros. Contractors, Inc. v. Virginia Military Institute, 675 S.E.2d 183 (2009)