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COVID Related Problems in Construction Law Contracts

Coronavirus7

Although technically there are no laws that require that construction or building jobs be halted, the COVID crisis—as well as some shutdowns that are currently beginning to occur again in other states—can cause problems for builders or contractors who are trying to meet deadlines on construction sites. Are you, as a builder or contractor, liable for delays? Can you ask for additional compensation for delays in the construction process?

Force Majeure

Many construction contracts have force majeure clauses that excuse performance for “acts of god,” like weather, or plague, or which excuse performance for events out of the parties’ control, such as riots, civil unrest, war, or government shutdowns.

Whether or not you want the force majeure to apply to your contract excusing performance of course depends on your position; if you are a builder and an owner who hired you wants you to stop construction, or wants to get out of paying because of  COVID, you likely would not want force majeure to apply. If you are a construction company that needs extra time to complete a project but don’t want to be in breach of contractual deadlines, you certainly would want the force majeure clause to excuse your timely performance.

COVID Related Delays

If you are seeking extra time under the contract to complete the construction project (or extra time without having to pay a contractual penalty), it is always good practice to fully document delays out of your control. Did your workers need to stay home because of COVID? Are you unable to work as quickly because workers can’t be close together? Did a shutdown in another state prevent you from shipping in needed materials? Put all of these delays in writing.

Of course, to get timely performance excused, you as the builder need to show that you did your best to complete the job on time, knowing the difficulties caused by COVID. That can mean taking measures that will provide “backup” in case of emergencies. Having backup inventory suppliers, or backup workers at the ready. These can all show a good faith effort to get the project completed on time.

The force majeure clause, or other language in your contract may also allow you as the builder to ask for extra payment, if the COVID problems lead to increased costs to your company.

Insurance

Now would be a good time to see if there is insurance coverage to protect you, in the event that you aren’t paid because of COVID. For example, the owner may go out of business before it is able to pay you. The owner may simply not want the project completed because of COVID. Business interruption insurance, or supply chain risk insurance may be able to help you.

Call our Fort Lauderdale construction attorneys at Sweeney Law P.A. at 954 440-3993 for a consultation or help with your construction law contracts and agreements.

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