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Does My Construction Contract's Force Majeure Clause Cover Pandemics and Quarantines Does My Construction Contract's Force Majeure Clause Cover Pandemics and Quarantines

Does My Construction Contract's Force Majeure Clause Cover Pandemics and Quarantines

These last two weeks have wreaked havoc on virtually every part of the world economy. Despite being an essential business, the construction industry is not immune to the effects of the global coronavirus (“COVID-19”) pandemic. Public and private projects are already seeing supply and material shortages and disruptions, labor shortages, government-imposed quarantines and overall project delays. Anyone involved with ongoing or planned construction needs to be proactive and take precautionary measures to protect their interests as the virus spreads throughout the country.

What Does The Contract Say?

Many of our calls begin with clients asking about their rights and obligations generally. Our first question is almost always—What does the contract say? Many contracts contain Force Majeure or delay clauses that excuse performance or entitle parties to additional time for conditions that are beyond the parties’ control and many of those clauses enumerate specific examples—natural disasters, labor strikes, civil unrest or government orders, among other things. These examples may shed some light on what may constitute a force majeure event, but what actually qualifies for a given project will depend on the language and particular contract.   

Standard forms from the American Institute of Architects and ConsensusDocs, for example, treat Force Majeure and delay clauses differently. AIA's general conditions do not use the term "epidemic" or "pandemic," but  provide that, in the event of delays in the commencement or progress of work, "by (1) an act or neglect of the Owner or Architect, of an employee of either, or of a Separate Contractor; (2) by changes ordered in the Work; (3) by labor disputes, fire, unusual delay in deliveries, unavoidable casualties, adverse weather conditions documented in accordance with Section 15.1.6.2, or other causes beyond the Contractor’s control; (4) by delay authorized by the Owner pending mediation and binding dispute resolution; or (5) by other causes that the Contractor asserts, and the Architect determines, justify delay, then the Contract Time shall be extended for such reasonable time as the Architect may determine."  (American Institute of Architects General Conditions of the Contract for Construction, Doc. A201 (2017)). ConsensusDocs uses the term "epidemics" in its Form 200, but not "pandemics" or quarantines.

The title of the clause is not important. The impact of a Force Majeure, delay or claim clause depends greatly on how the clause is written. Even if the clause does not use the terms "epidemic" or "pandemic," there may be a general catch-all phrase like "other causes not within the control of the contractor" that will govern, particularly if the architect or owner agrees. Interpretation may depend on the context of the contract documents, the applicable local law and/or other words contained in the FM clause.

What Form And Content Of Notice Is Required?

For notice, do not assume the sufficiency of an email or generic notice. Look to the contract. For form of notice, determine whether the contract calls for notices to be sent to a particular person and by a particular form of delivery. For content, look to the claim, change order and Force Majeure provisions for guidance. Notice to all affected parties should typically be made as soon as a delay or work impediment is recognized. Depending on the level of detail required by the contract, the notice will likely also need to include information about the ongoing nature of the epidemic or quarantine and whether the length of the delay can be determined.

Whether you are an owner, general contractor, subcontractor or architect, read your contracts and call your construction lawyers to review your notices and guide your decisions.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
 
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