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January 2nd, 2018
construction
THIRD DISTRICT COURT OF APPEAL OF FLORIDA HOLDS THAT PARTIES ARE ABLE TO INCLUDE A PROVSION IN A CONTRACT WHICH PRECLUDES THIRD PARTY BENEFICIARY STATUS

In Perez-Gurri Corp. v. McLeod, No. 3D15-2590, 2017 WL 5616924, at *1 (Fla. Dist. Ct. App. Nov. 22, 2017), the District Court of Appeal of Florida, Third District, overturned a trial court’s decision to preclude a general contractor from seeking delay damages on the basis that the subcontractors were not intended third-party beneficiaries of the contract between the general contractor and the owner.

Plaintiff, a Florida construction company (“General Contractor”), was selected to serve as the general contractor by the City of Miami (the “City”) on one of its renovation projects. When construction on the renovation project was delayed, the General Contractor brought an action against multiple architects, engineers, and consultants (collectively, “Defendants”). Each of the Defendants filed separate motions for summary judgment, arguing in part that the General Contractor’s claim for delay damages was due to be dismissed on the grounds that the General Contractor was barred from doing so by a “No Damages for Delay” clause in its contract with the City.

While the Appeals Court agreed that the contract between the City and the General Contractor expressly waived the General Contractor’s right to seek delay damages, it found that the contract, read in its entirety, did not extend the waiver to other parties. It came to this conclusion based largely on a separate provision of the contract in which the City and General Contractor expressly agreed that there were no third-party beneficiaries to the contract, nor had the parties intended to create any rights or obligations for any third-party as a result of the parties entering into the Contract. Based upon this language, the Appeals Court concluded that this provision expressly limited the “No Damages for Delay” waiver to the City, and the General Contractor was entitled to seek damages for delays against all Defendants to the extent it could establish liability. 

Significant litigation arises from obligations allegedly owed to parties who are not signatories to a contract. This case makes clear that inclusion of a provision which expressly defines who, if anyone, is a third-party beneficiary to a contract could alleviate such an issue should the parties find themselves in litigation. We therefore recommend that all of our clients consider incorporating a provision in its contracts which clearly defines who the contract is and is not intended to benefit.

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