Whether or not your works have been suspended or are continuing, coronavirus is in some way likely to affect your construction project. This article lists the important things to think about when reviewing or drafting your construction contract in response to coronavirus .
In light of the circumstances surrounding coronavirus it is prudent for all parties to consider the following in relation to their construction contract:
What is your contract?
It is important to first establish whether or not you have a contract. If you do, what are its main terms, and has it been effectively amended? Most of the remedies available to the parties are likely to be purely contractual and so much depends on the agreed terms between the parties.
Identify grounds for potential claims
Whether or not the contractor has a claim for an extension of time and/or loss and expense will depend on their rights within the contract. Unless the contract is recent, it is unlikely to make express reference to coronavirus (or COVID-19). How else can the effects of coronavirus be identified and utilised within the contract?
Continue to comply with the contract
Even in these exceptional circumstances, it is still important to comply with the terms of the contract. If the contractor is making a claim, are they entitled to claim for this under the contract? Has the contractor notified their claim in the correct way and within the necessary timeframe? Has the contractor taken all reasonable steps to mitigate the effects of coronavirus? What evidence and records do you need to preserve in order to increase prospects of a successful claim?
If the works need to be suspended, does the party have a contractual right to suspend? How long is such suspension permitted for under the contract? Do the grounds for suspension give rise to any other contractual rights and what effect will this have on third party agreements? What are the implications of suspension on site security, insurance and health and safety?
Have the parties’ right to termination been triggered? Is this unintentional and avoidable? What implications will this have for the rest of the project and upon funding?
As we hit unprecedented times, it is important to rely upon your contract in order to give you security and peace of mind. Ignoring your contract or acting upon it in an inaccurate way is likely to shore up trouble later and may potentially give rise to future disputes. The parties should give careful thought to their existing contractual rights before trying to resolve matters on site, so that their actions do not conflict with or inadvertently trigger other important matters within the contract.