Contractors are reporting that the coronavirus (COVID-19) is starting to impact local construction projects. Clients have observed (or may soon observe) the following impacts:
- Delays in material and equipment supply
- Labor shortage due to worker self-quarantine
- Delays in issuance of permits and inspections
- Scheduling and other delays
These impacts will likely cause some level of financial harm or damages:
- Owners may experience increased financing costs, claims from buyers and tenants, and delays in completion.
- Contractors may incur increased general conditions, higher material prices, and directives to delay, accelerate, or compress their schedules.
The main contract provision and legal principle that the coronavirus may trigger is a force majeure provision. Most construction contracts contain some language discussing unforeseen circumstances that will excuse a party from performing some contractual obligation. These are typically events outside of either party’s control. They may also be referred to as “Acts of God,” or simply as “other causes beyond the Contractor’s control” as the AIA A201 describes them.
Delays caused by a pandemic such as the coronavirus may very well trigger a force majeure clause. When a force majeure clause is triggered, a party may be excused from performance and insulated from liability. But while these provisions may offer protection, the way the contractor responds to the specific impact will determine whether the contractor can rely on their protection.
From a contractual standpoint, how should you respond to impacts and damages the coronavirus causes?
- Read your contracts. Review the provisions of your contracts that discuss a) delays, b) claims, and c) notice requirements. When the dust settles, it may not be enough to simply prove that the coronavirus affected your performance, you may need to strictly follow contractual claim and notice provisions in order to protect your rights.
- Monitor impacts. Impacts of the coronavirus on construction projects will change and increase as the pandemic spreads. A schedule acceleration impact will require a different response or claim than a delay in material supplies. Consider the appropriate response for each impact.
- Keep records. When it comes time to prove damages, contractors with careful records may be the ones to successfully pursue or defend a claim.
- Mitigate damages. Parties to construction contracts have a duty to mitigate damages in order to recover them. Carefully think through the damages you anticipate incurring and consider alternative ways to reduce damages. This may prove the difference in recovering damages from the impact.
- Consider insurance coverage. Many policies will not cover certain Acts of God or events that cause economic losses outside of actual damage to the project property. On the other hand, business interruption and other policies may provide some avenue for recovery. Careful review of these is important.
Each project and contract usually requires a different response and strategy – if you have specific questions about your particular situation, do not hesitate to give the construction team at Hirschler a call.
As president of Hirschler and head of the firm's litigation section, Courtney knows how to lead people and projects to a successful outcome.
Leveraging deep experience in the construction industry, Courtney advises public and ...
Liz combines enthusiasm and diligence to help her clients resolve complex disputes. Whether the dispute is a construction claim, a breach of contract, or a business tort, Liz brings focus and determination to every case. Liz has ...
Kelly’s practice focuses on construction law, commercial and product liability law, with an emphasis on dispute resolution—including mediation, arbitration, jury and bench trials in state and federal court. She routinely ...
Nate fully engages in each case and shoulders his clients’ needs. Communication, efficiency and careful judgment define his practice. In every case, he investigates competing claims to thoroughly understand their strengths ...
A professional engineer (P.E.) and an experienced lawyer, Webb began practicing at Hirschler Fleischer following four years of work as a consulting engineer. His multidisciplinary practice focuses on general business and ...
SubscribeSubscribe to Hirschler by Email
- Jaime Wisegarver Outlines Labor Department Guidance on Travel Time Pay in Construction Executive
- New Defense to Joint Liability Available to Contractors
- What Employers Need to Know About Virginia’s New Overtime Wage Act
- OSHA Increases Amounts of Civil Penalties for 2021
- Have Force Majeure Defenses Based on COVID-19 Been Successful This Year?
- Kelly Bundy and Liz Burneson Publish Article on Joint Employer Status in Construction Executive
- Kelly Bundy Authors Article for ABA Construction Law Forum’s “Under Construction” Series
- Miller Act Notice More Than 90 Days Before A Subcontractor’s Final Day of Work Held Untimely
- Virginia Supreme Court Allows Sub-Sub Material Supplier To Recover Directly From General Contractor For Unpaid Material
- New Virginia Law Can Make General Contractors Liable for Subcontractors' Employee Wages
- Occupational Safety and Health Act (OSHA)
- Department of Labor (DOL)
- COVID-19, Coronavirus Outbreak
- Dispute Resolution
- Little Miller Act
- Government Contracts
- Miller Act
- Fair Labor Standards Act
- Lien Waivers
- Workforce Development
- Mechanic's Liens
- Department of Professional and Occupational Regulation (DPOR)
- Force Majeure
- Joint Checks
- Unjust Enrichment
- Virginia Employment Commission (VEC)
- Virginia Workers' Compensation Commission
- Uniform Statewide Building Code
- Change Orders
- June 2021
- April 2021
- January 2021
- October 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- November 2019
- August 2019
- June 2019
- April 2019
- February 2019
- January 2019
- December 2018
- October 2018
- September 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- November 2017
- October 2017
- September 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016