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Senate advances construction-contract bill to curb "no-damage-for-delay" clauses after amendment
Summary
Lawmakers passed Substitute Senate Bill 252 to limit enforcement of broad 'no damage for delay' clauses in construction contracts when substantial bargaining-power imbalances exist. Supporters said it protects small subcontractors; opponents warned about state intrusion into private contracting. The bill moved to third reading after a successful amendment.
The Senate amended and advanced Substitute Senate Bill 252, a measure aimed at restricting the use of so-called "no damage for delay" clauses that shift delay costs entirely onto subcontractors.
Sponsor Senator Jenkins described situations where subcontractors are left unpaid or forced to accept final payment only after waiving legal claims. "No damage for delay clause forces contractors and some subcontractors to waive claims that they may later have when a construction project is delayed to no fault of their own," Jenkins said during floor debate.
Senator Gladwell argued against broad statutory intervention, saying the Legislature should not become "a super legislature" micromanaging commercial contracts. In response to concerns about overreach, the Senate adopted an amendment narrowing the protection to cases "if a substantial difference in bargaining power exists between the parties," limiting the measure’s reach to contracts where imbalance is demonstrable.
Proponents emphasized that the change brings Utah in line with other states that have adopted similar protections for subcontractors. After debate and amendment, the Senate voted to advance the bill to third reading; the clerk recorded 22 ayes and 6 nays. The legislation now moves forward for final consideration.
Supporters and opponents indicated they will continue refining definitions and the factual standard by which courts determine bargaining-power disparities, and the bill's sponsors signaled intent to preserve avenues for legitimate negotiated risk allocation where parties truly have equal bargaining strength.
