Most standard construction contracts include a force majeure clause that can excuse contractors if they are unable to meet performance obligations due to events beyond their control. COVID-19 could certainly qualify as such an event, but a force majeure clause alone will not necessarily provide relief from contractual requirements.
Contactors should always consult their legal counsel to help interpret contract language, and the information that follows should not be construed as legal advice. It can be helpful however, to review some basic questions involved in the force majeure concept.
What Is Force Majeure?
The term “force majeure” (literally “superior force”) refers to events that are unforeseeable, unavoidable, and beyond the control of any parties to a contract (sometimes referred to as “Acts of God”). A force majeure clause can excuse the contracting parties if such an event prevents them from meeting their contract obligations, and in some cases, can provide additional time or financial compensation.
Most contracts used in the construction industry—such as those drafted by the American Institute of Architects, the Associated General Contractors of America, and other trade and professional groups—contain standard clauses listing specific force majeure events such as natural disasters, wars, terrorism, riots, labor strikes, and epidemics. Even if contract language does not specifically list a pandemic as a force majeure event, most contracts include a catch-all phrase such as “other causes beyond the parties’ control.”
Because the COVID-19 pandemic has been with us for a year, one could argue its effects are no longer unforeseeable. This could make it more difficult to invoke force majeure on newer contracts in which all parties were aware of pandemic-related risks.
In addition to excusing nonperformance, a force majeure clause might entitle contractors to schedule or cost adjustments. But contractors should understand that a force majeure clause could also provide relief to project owners, providing a defense against a contractor’s claim for damages due to project delays.
In either case, contractors should comply with the notice and documentation requirements for requesting time extensions, additional compensation due to escalating material costs, or other force majeure-related claims. Above all, they should work closely with their legal counsel to review contract language on existing projects and update future contract language to provide adequate protection against pandemic-driven delays and cost increases.
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