The Bottom Line
- Actions Speak Louder Than Contracts: A contract’s strict deadline can be unintentionally waived by your conduct. If you continue issuing new instructions or accept delays without formally reserving your rights, a court may rule you cannot enforce the original terms.
- Communication is Key (And Can Be a Trap): Ambiguous communications during project delays can severely weaken your legal position. Discussing new timelines and additional work after a deadline has passed implies that the original deadline is no longer in force.
- Termination Requires a Clear Default: Before terminating a contract for a missed deadline, ensure the other party is legally “in default.” If your actions have created uncertainty around the deadline, a premature termination may be considered wrongful, nullifying your claims for penalties and damages.
The Details
This case from the Dutch Caribbean highlights a critical risk for any company managing large projects. A client entered into a construction agreement with a contractor to build a commercial shell in Bonaire. The contract included a firm completion date of August 14, 2018, with a daily penalty of US$250 for delays. When the contractor missed this deadline, the client eventually terminated the agreement and sued for over US$170,000 in penalties and additional damages. The Court, however, sided with the contractor, finding that the client’s own actions had effectively nullified the original deadline.
The Court’s reasoning hinged on the events that followed the missed deadline. An “act of God“—the unexpected closure of a local pier, which halted the supply of essential building materials—was the initial cause of the delay. The contractor promptly notified the client. Crucially, the client did not immediately enforce the penalty clause. Instead, over the following months, the client and their architect continued to issue new drawings, request changes, and approve additional work. This ongoing collaboration and alteration of the project scope created a situation where it was no longer reasonable to hold the contractor to the original, now long-passed, deadline.
The final element that sealed the client’s fate was their own legal correspondence. While complaining of delays, the client’s lawyer sent a formal letter in January 2019 giving the contractor a new final deadline of January 25 to complete all outstanding work. However, just nine days later, and before this new deadline expired, the client terminated the contract. The Court concluded that due to the client’s inconsistent conduct—waiving the original deadline through its actions and then setting a new one—the contractor was not legally in default at the moment of termination. The termination was therefore unjustified, and the client’s claims for penalties and damages were dismissed entirely.
Source
Gemeenschappelijk Hof van Justitie van Aruba, Curaçao, Sint Maarten en van Bonaire, Sint Eustatius en Saba
