Spring Cleaning: Review Your Contracts to Account for Ongoing COVID-19 Concerns
At this point, avoiding the cliché is, well, unavoidable. We are now past the one-year mark of the COVID-19 pandemic and much has changed. You don’t need a construction attorney to tell you so. While things have changed, we all must move forward in the “new normal,” including those in construction.
As we move into the second quarter of 2021, it’s an opportune time to look at where we have been and where we are going. To do so, you must review your contracts and construction relationships both retrospectively and prospectively.
At the onset of the pandemic in March 2020, construction largely came grinding to a halt. Many companies turned to their contracts to see what relief, if any, they had. Construction shutdowns meant lost time and money. One provision that was helpful is known as a force majeure clause, which provides a party relief when the unforeseen—such as a global pandemic—occurs.
Now, it’s difficult to argue that the COVID-19 pandemic is unforeseen going forward. So, what can construction companies do to still protect themselves?
First, companies should review their contracts to ensure that they have accounted for the ongoing pandemic. Provisions related to delay, stoppages, and safety are obvious choices. However, companies should also analyze what their contracts say, if anything, about changes in the current situation that could occur due to future strains, variants, or other complications. Should future, widespread outbreaks occur from COVID-19, or other infectious diseases, you should make sure that you are protected. We suggest revising all force majeure clauses to specifically reference pandemics, epidemics, and related governmental orders to remove all question that the repercussions of future strains are not foreseeable.
Additionally, companies should pay special attention to provisions that address material escalation, material delays, or the inability to procure certain materials. As shelved projects take off alongside ongoing work, material availability can be scarce, so it is important to anticipate the impacts that these complications can have in finishing your work or the overall project’s completion.
Furthermore, many may face a backlog of work as a result of shutdowns or delayed starts. Once-promised start and completion dates may not be possible. Be mindful of the time and monetary impacts and protect yourself in these instances too.
While we cannot help but reflect on the past year, it’s also important to look forward and be prepared by using what we have learned from the difficulties that we have overcome.
As always, if you have specific questions about your contracts or projects, do not hesitate to reach out.