“No Damages for Delay” Clause Enforceability in Pennsylvania

As is the case across the majority of the country, “no damages for delay” clauses in construction contracts are generally enforceable in the Commonwealth of Pennsylvania.  In fact, the Supreme Court of Pennsylvania has recognized “no damages for delay” clauses as enforceable since at least its 1935 decision in Henry Shenk Co. v. Erie County.[1]  

A “no damages for delay” clause is a common construction contract provision that, in general, shifts the risk of monetary loss due to delay on the construction project to one party, generally downstream (from an owner to contractor, contractor to subcontractor, etc.).  A “no damages for delay” clause changes the traditional “control” based dynamics of determining delay liability, – i.e. is the delay beyond or within the control of one or both parties?     

Generally, a delay within the control of one party is, under the traditional rule, an excusable and compensable delay for the non-delaying party.[2]  Thus, when a delay is within the control of or the fault of one party, the non-delaying party would be entitled to additional time (excusable delay) and additional compensation (compensable delay).  In comparison, a delay that is beyond the control of both parties, for example an unanticipated weather event or natural disaster (a “force majeure” event), would be an excusable but non-compensable delay.  The traditional remedy for the contractor/subcontractor facing a delay outside of both parties’ control is a time extension without additional compensation.  In the broadest form, when the parties agree to a “no damages for delay” clause, all delays to the contractor/subcontractor’s performance, without regard to  the traditional fault-based “control” analysis, are non-compensable, leaving a time extension as the only remedy, unless an exception developed through case law applies.

In Pennsylvania, we return to the Supreme Court’s 1935 decision in Henry Shenk Co. v. Erie County for the genesis of the exceptions to the enforceability of a “no damages for delay” clause.  In its decision, the Supreme Court of Pennsylvania established that a “no damages for delay” clause does not bar a contractor’s delay and disruption claims against an owner where (1) there is an affirmative or positive interference by the owner with the contractor’s work, or (2) there is a failure on the part of the owner to act in some essential matter necessary to the prosecution of the work.[3]  Notably, Pennsylvania courts have applied the rules from Shenk to “no damages for delay” clauses in contracts between contractor and subcontractors.[4]  These are limited exceptions that require specific factual circumstances to overcome the bar presented by a presumptively enforceable “no damages for delay” clause. 

Understanding that “no damages for delay” clauses are generally enforceable should reemphasize to construction professionals in Pennsylvania (and throughout the country) the undeniable importance of negotiating terms and conditions in each construction contract to properly address the risks of loss presented in executing the work. 

[1] Henry Shenk Co. v. Erie Cnty., 319 Pa. 100, 178 A. 662 (1935).

[2] See § 15:22. Common-law allocation of risks impacting timely performance: Doctrine of Force Majeure and concept of "control", 6 Bruner & O'Connor Construction Law § 15:22.

[3] See Quinn Constr., Inc. v. Skanska USA Bldg., Inc., 730 F. Supp. 2d 401, 411 (E.D. Pa. 2010) (citing Henry Shenk Co. v. Erie Cnty., 319 Pa. 100, 104, 178 A. 662, 664 (1935)). 

[4] See Quinn Constr., Inc., 730 F. Supp. 2d at 411.

A Cost-Plus Contract Does Not Establish an “Agreed Sum” under the Pennsylvania Mechanics’ Lien Law

One of a variety of routinely utilized contract types that are within the toolkit for construction industry professionals is a “cost-plus” contract. Generally, under a cost-plus contract, the contractor is reimbursed for the actual cost of the work performed plus the contractor is paid a fee.  One of benefits of a cost-plus contract for a contractor, in its most basic form, is that the risk of cost overruns is borne by the owner.  However, the uncertainty of the total amount that will ultimately be paid for the work by the owner under a cost-plus contract creates a wrinkle under the Pennsylvania Mechanics’ Lien Law for contractors that, if not properly addressed when filing the lien, can result in the contractor’s lien rights being extinguished. 

This was the situation addressed by the Superior Court of Pennsylvania in the unpublished decision of PW Campbell Contracting Co. v. Yetter[1] issued on April 14, 2025.  In summary, the Superior Court decided that a “cost-plus” contract does not establish an “agreed sum” under the Mechanics’ Lien Law.  Accordingly, for a contractor to perfect a lien when work is performed under a cost-plus contract, the statement of mechanics’ lien claim must include a detailed statement of the kind and character of the labor and material furnished and the prices charged for such labor and material.  In short, the claim should describe the work in detail and have the invoices for the work attached, otherwise, it will not be enforceable.   

To understand the basis of this decision, one must recognize, as both the trial court and the Superior Court did, that the Pennsylvania Mechanics’ Lien Law establishes different requirements to perfect a lien based on whether the person or entity performing the work is a “contractor” or a “subcontractor.”  One of the differences between the requirements  for a “contractor” versus a “subcontractor” is the contents of the statement of mechanics’ lien claim.  Presuming all other statutory requirements are met, a contractor’s statement of mechanics’ lien claim if “under a contract or contracts for an agreed sum” is sufficiently stated if it identifies the contract and includes a general statement of the kind and character of the work.[2]  In all other circumstances, however, the statement of mechanic’s lien claim must include “a detailed statement of the kind and character of the labor or materials furnished, or both, and the prices charged for each thereof.”[3]     

In P.W. Campbell, P.W. Campbell Contracting Company (PWCC) entered into design-build contract with a homeowner for the design and construction of a porch, pool house, and other improvements to the home.  Although the title of the contract classified it as a “lump sum” agreement, a lump sum amount was only established for the design portion of the work.  The contract stated that the construction costs were to be paid at “the cost of the work, plus 25%.”   Disputes arose between PWCC and the homeowner, which led to PWCC filing a mechanic’s lien for the unpaid amounts it claimed were due for the construction work performed.  PWCC attached the design-build contract it entered into with the homeowner to its statement of mechanics’ lien but it did not attach invoices or any other documentation supporting the calculation of the amounts PWCC claimed were due and owed.  PWCC’s position was that invoices or other documentation was not required, because it was a “contractor” performing work under a contract for an “agreed sum.” PWCC argued that the statement of mechanics’ lien claim substantially complied with the Mechanics’ Lien Law because the contract established the “agreed-upon framework pursuant to which PWCC charged the [homeowner].”          

There was no dispute that PWCC was a “contractor” under Mechanics’ Lien Law, as it contracted directly with the homeowners for design and construction.  However, both the trial court and the Superior Court decided that the “cost-plus” payment arrangement set forth in PWCC’s contract with the homeowner did not constitute an “agreed sum” under the Mechanics’ Lien Law.  Accordingly, PWCC was required to provide a detailed statement of the kind and character of the work with the prices charged therefore in its statement of mechanics’ lien claim.  Having failed to do so, PWCC’s mechanics’ lien was found invalid for a failure to comply with Mechanics’ Lien Law. 

As it has repeatedly done in its decisions on the Mechanics’ Lien Law over the last several years, the Superior Court quoted the Pennsylvania Supreme Court’s decision in Terra Firma Builders, LLC v. King[4], stating “a contractor seeking the benefit of the lien must judiciously adhere to the requirements of the Mechanics’ Lien law it order to secure a valid and enforceable lien.”   The Superior Court once again reminds the construction industry that the Mechanics’ Lien Law is filled with traps for unwary and any one of those traps can lead to a mechanics’ lien for amounts that may be undisputedly due and owed being extinguished.          

If you have questions about this article or need guidance in relation to the Pennsylvania Mechanics’ Lien Law, please contact J.T. Gallagher at jtg@hpsslaw.com or call the firm’s Lehigh Valley, Pennsylvania office at 610-484-4459.  

[1] PW Campbell Contracting Co. v. Yetter, No. 910 WDA 2024, 2025 WL 1099644 (Pa. Super. Ct. Apr. 14, 2025).

[2] 49 P.S. § 1503(5) (emphasis added).

[3] 49 P.S. § 1503(6) (emphasis added).

[4] 249 A.3d 976, 983 (PA. 2021). 

Superior Court of Pennsylvania Mechanics’ Lien Law Decisions Emphasize the Legal and Practical Importance of Strict Adherence to the Statutory Requirements.

The Superior Court of Pennsylvania issued two decisions in January 2025 addressing certain actions statutorily required for the perfection of liens under the Pennsylvania Mechanics’ Lien Law of 1963 (“Mechanics’ Lien Law”).  Although the cases were decided along different lines and, in one of the case, substantial compliance with the Mechanics’ Lien Law was found sufficient, they both serve as clear reminders that strictly adhering to the letter of the Mechanics’ Lien Law, and all other jurisdictions’ lien laws, is an absolute must.  Any failure to strictly comply with the statutory procedures invites a challenge to a lien’s validity, increasing the legal costs a claimant is forced to incur, and may invalidate a lien, striping a claimant of security for the amounts they may be undeniably due and owed.       

First, on January 7, 2025, the Superior Court, in Celtic Conversions, LLC v. Birch Tree Investments, LLC[1], affirmed the trial court’s finding that Celtic’s lien was invalid because the lien was not filed until after the property where the work was completed was sold by the owner who had hired Celtic to an “innocent purchaser.”  Notably, the Mechanics’ Lien Law plainly states that, “if the property be conveyed in good faith and for a valuable consideration prior to the filing of a claim for alterations or repairs, the lien shall be wholly lost.”  49. P.S. § 1303(c).  Thus, Celtic’s filing of the lien was a clear failure to strictly adhere to the requirements of the Mechanics’ Lien Law.  In fact, the trial court found that Celtic had wholly ignored the Mechanics’ Lien Law, “ensnaring an innocent purchaser in three years of litigation,” and awarded the property owner its attorneys’ fees to defend against what the trail court held was an arbitrary lien.  The Superior Court upheld the award of attorneys’ fees. 

Second, on January 24, 2025, the Superior Court, in Clark Property Maintenance, LLC v. Peak Real Estate Solutions[2], reversed the trial court’s decision striking Clark Property Maintenance’s (“CPM”) lien for failure to file an affidavit of services in strict compliance with the Mechanic’s Lien Law.  CPM had filed a sheriff’s return of service instead of the affidavit of service required by the Mechanics’ Lien Law.  The Superior Court held that the filing of a sheriff’s return of service satisfied the notice requirements of the Mechanics’ Lien Law, with notice being strictly required, and substantially complied with the Mechanics’ Lien Law as to the form of notice.  Although the trial court was reversed and CPM is now able to proceed in the trial court to prove its entitlement to enforce the lien, its failure to file an affidavit of service in strict compliance with the Mechanics’ Lien Law left its lien subject challenge and forced an appeal that may have otherwise been unnecessary.                  

Materialmen and mechanics’ lien laws in Pennsylvania and throughout the country require strict adherence to their specific statutory requirements and are filled with traps for the unwary.  Proactive development of state specific operational procedures for ensuring compliance with the lien laws throughout performance of the work on each construction project performed is vital to protect a contractor’s lien rights.  If you have questions about this article or need guidance in relation to the Pennsylvania Mechanics’ Lien Law, please contact J.T. Gallagher at jtg@hpsslaw.com or call the firm’s Lehigh Valley, Pennsylvania office at 610-484-4459.  

[1] Celtic Conversions, LLC v. Birch Tree Investments, LLC, No. 2562 EDA 2023, 2025 WL 40590 (Pa. Super. Ct. Jan. 7, 2025).

[2] Clark Prop. Maint., LLC v. Peak Real Est. Sols., LLC, 2025 PA Super 15 (Jan. 24, 2025).

Lien Rights Do Not Extend to Suppliers of Rental Equipment in Pennsylvania

In its decision in the matter of Cleveland Brothers Equipment Company, Inc. v. Arcadia North Land, LLC, issued on November 4, 2024, the Superior Court of Pennsylvania confirmed that a rental equipment supplier who had not been paid for leased equipment used during construction but not “incorporated into the improvement” had no lien rights under the Pennsylvania Mechanics’ Lien Law. The Court’s decision relied upon and effectively re-affirmed its October 19, 2023, decision in R.A. Greig Equipment Company v. Mark Erie Hospitality, LLC.  In Grieg, the Superior Court, recognizing a lack case law on the topic and citing as its support a 1923 Pennsylvania Supreme Court case, held that the Mechanics Lien Law required construction equipment to be “‘incorporated into the improvement,’ i.e., actually used in the building structure” for it to serve as the basis for a lien.  Notably, the Mechanics Lien Law itself defines “materials” as “building materials and supplies of all kinds, and also includes fixtures, machinery and equipment reasonably necessary to and incorporated into the improvement.”  (emphasis supplied) 49 P.S. § 1201(7).  In both Cleveland Brothers and Grieg, the Superior Court found that rental equipment used during construction (an excavator in Cleveland Brothers and telehandler in Grieg) could not serve as the basis of a lien because the equipment was not “incorporated into the improvement.”  The Grieg decision, as confirmed by Cleveland Brothers decision, has made it clear that, in Pennsylvania, mechanics lien rights do not extend to suppliers of rental equipment that is utilized on construction projects. 

If you have questions about this article or need guidance in relation to the Pennsylvania Mechanics’ Lien Law, please contact J.T. Gallagher at jtg@hpsslaw.com or call the firm’s Pennsylvania office at 610-484-4459.