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Coronavirus: business as usual for construction disputes?

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COVID-19 presents new challenges in construction litigation. This article considers some of the difficulties that can arise and what can be done about them.   

In these exceptional times, COVID-19 has made us re-evaluate a number of things that we take for granted and which have now become more onerous to carry out. As the usual rules in construction disputes apply, it is worth noting the potential difficulties that can arise given our new circumstances and what contingencies can be made to guard against these risks:

Contractual Notices

Contractual notices are often used by a party to assert their rights under a contract. Many notices need to be served within a specific timeframe or require a response from the other party within a fixed number of days. Failure to adhere to these timeframes could severely jeopardise the party’s rights, for example in claiming an extension of time, additional time and money, or in responding to an adjudication. Therefore, the ability to serve and respond to notices continues to be critical. 

The parties should note that their contract will often prescribe how such notices should be served. A notice which is not served via the means specified in the contract (such as by post or fax) may not be valid. As most people are now working from home, there is a temptation to serve notice by email. The parties should take care that they can only legitimately serve notice by email if they are permitted to do so under their contract, or have the other side’s consent to serve notice in such a way.  

The contract may also specify when such notice should be served.  If there is a continued need to serve such notice by way of post or fax, as specified in the contract, then delay may be likely. The party serving a notice must therefore make extra preparation and factor in any potential delay that can arise, either due to the practical difficulties of working out of the office or from delivery via Royal Mail.    

It is also worth noting where such notice is to be served. A contract will usually provide that an effective notice must be served at the address specified or the party’s registered address. With the government lockdown, many people cannot access their usual place of work or registered place of business. The postal service is continuing to run however, and there is nothing to stop such notices being delivered. If a notice must be responded to by a particular timeframe, then such timeframes will continue to run. It would be dangerous to assume that you will be able to get a concession if you delay your response. Such delay may, in itself, become the subject of unnecessary and expensive litigation. It is prudent to make plans on how your post is monitored so that you can take prompt action regarding any notices that need immediate attention. 

Keeping and preserving written records

The circumstances we find ourselves in may give rise to future disputes. Even if the parties are agreeing to pull together during this difficult time, there may be a change in attitudes later down the line.  The parties will want some way to apportion or claim additional time and money.  

Keeping and preserving written records of matters relating to ordering supplies, managing labour, and co-ordinating the works is just as important as ever. This may be critical in the event of a claim in order to establish what has been agreed or when matters first became reasonably foreseeable (which is often the beginning of any contractual timeframe to commence a claim under the contract).   

As we adapt to different working practices arising from social distancing, try to maintain usual practices regarding record keeping just as before. This may prove to be invaluable to you later in the event of a dispute. 

The contract always prevails

In this current situation, it is tempting to act quickly or problem solve creatively. The contract however continues to apply. It is important to always check first what your position is under the contract before taking action. For example, it may feel that suspending the works is the right thing to do, but does you contract permit suspension and what are the consequences of doing so under the contract or under any third party agreements? 

The parties may consider that their contract is not suitable in the circumstances and agree to vary its terms accordingly. Any agreements that are made amending the contract should be carefully expressed and made in writing. This is particularly important if the contract contains a “no oral modification” clause, which means that any oral agreements are invalid and unenforceable. 

More Information

For more information regarding the impact of coronavirus on construction litigation, contact one of our experts listed below.

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