Document Type

Case Summary

Publication Date

7-2-2022

Case Synopsis

This is an appeal from a district court judgment after a bench trial in a contract action, arising from a dispute regarding delay costs between a contractor and subcontractor. The question considered is whether the district court properly applied the covenant of good faith and fair dealing when it awarded delay damages by signing a waiver and release to receive its retention. The standard for the covenant of good faith and fair dealing “prohibits arbitrary or unfair acts by one party that work to the disadvantage of the other.”2 The court also interpreted whether the subcontractor waived its right to receive delay damages by signing a waiver and release to receive its retention, pursuant to the provisions of NRS 338.490, which limits any waiver or release to the claimed costs that are the subject of a progress or retainage bill. The court concluded that the district court properly determined the covenant of good faith and fair dealing applies in this case; that the contract breached the covenant, and that the subcontractor did not waive its delay claims. The court further affirmed the district court’s decision to apply the covenant of good faith and fair dealing.

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