May 25, 2020
Force Majeure Clause to Construction Projects’ Rescue
As a survivor of CONEXPO-CON/AGG 2020, I feel uniquely positioned to comment on the resiliency of the construction industry. As a whole, the construction industry is an optimistic entity. Contractors estimate what a project will cost to execute weeks, months or even years prior to its completion, and then submit a bid based on that estimate, believing an owner or agency will award the work and pay for it in the end. This is a system built on a level of trust and optimism, yes, but it’s also built on contracts spelled out in excruciating detail.
As of late, those details are getting a workout. Not many contracts prior to the 2003 outbreak of Severe Acute Respiratory Syndrome coronavirus (SARS-CoV) included language specifying bacteria, viruses and contagions as acceptable reasons to institute a Force Majeure clause. Theresa Bevilacqua of Dorsey™ explained that these specific words have been finding their way into contract language after SARS, but, pre-COVID-19, interpretations of “standard property damage” in Force Majeure clauses were excluding these concepts unless they were spelled out. In other words, look at your contract for specific language. But don’t lose hope if you don’t see “global pandemic” listed as a reason for delayed work.
If you’ve had to suspend a portion of a project’s completion due to a member of your crew testing positive for COVID-19, and thus sending the rest of the crew to mandatory testing and possibly 14-day quarantine, you have a case for using the Force Majeure clause. The team at Dorsey explained during its May 1 webinar COVID-19’s Immediate Impact on Civil Litigation, “there will be changes in law that no one could have predicted before now. Clearly, every business has been interrupted by COVID. But it all depends on what the contract says.”
The bottom line? Review your contract. If your projects have been interrupted by the Novel Coronavirus outbreak this year, you must provide notice of the Force Majeure event. Your contract will spell out the number of days you have to provide notice, and it might be a surprisingly small number. If you have two days to let the general contractor or the state know you’re having a COVID-19-related interruption, then your chances for using Force Majeure in this troubling time decrease when you dawdle.