Understanding Force Majeure Clauses in Construction Contracts & Whether the Covid-19 Pandemic Constitutes A Force Majeure Event
Like many industries, the construction industry has been significantly affected by the current pandemic. In some areas, construction projects were shutdown for weeks or months, leading to significant delays and the push-back of project milestones and completion dates. In addition, slowdowns in material deliveries, new job site procedures, and personnel exposure to the virus have further impacted schedules. All of these factors can put financial strains on developers, GCs, and subcontractors and can potentially lead to disputes with project owners who may seek liquidated damages or other contract-specified penalties for late completion of a construction project.
Contractors, surety companies, banks, developers, and owners must review and understand the specific Force Majeure clauses within their contracts to understand their potential risk and exposure. A good law firm specializing in construction contracts can help review contracts and analyze any Force Majeure provisions. For example, the contract may or may not specifically include a clearly-defined Force Majeure clause or specific wording related to pandemics, epidemics, acts of god, or government-ordered shutdowns. There are definitely going to be grey areas and disputes when it comes to how much financial relief each party feels they are entitled to and what is an acceptable new completion date.
Beacon is uniquely qualified to help ascertain what the impact of the pandemic has been for a specific project, by doing all of the following:
- Analyzing the original project schedule and identifying / quantifying delays related to the pandemic or other factors
- Assessing the project cost and schedule impacts of pandemic-related delays versus delays caused by other factors
- Assisting with the review / development of an updated project schedule
- Identifying factors which could impact the project schedule going forward (whether pandemic related or not)
- Providing expert analysis and testimony in cases where pandemic-related delays lead to legal disputes
- Ensuring the on-site procedures are in place to help ensure worker safety and reduced liability exposure related to worker safety claims
Please Contact Beacon if you have any concerns related to the impact of Covid-19 on your construction project.
