The government and market response to COVID-19 will disrupt supply chains, prevent trades from working, complicate inspections and make credit less available to fund construction projects. These issues may cause disruptions and delays. Who bears what risks posed by these disruptions and delays depends primarily on the language in the parties’ construction contracts.

Most construction contracts have “force majeure” or “acts of God” provisions of some sort, although they may not use those words. Force majeure is loosely defined as unforeseeable circumstances beyond a party’s control that prevent a party from fulfilling (or timely fulfilling) a contract. Acts of God language refers to natural events such as storms, earthquakes and floods. Force majeure events include natural disasters, but go further — any event that occurs without a party’s control that the party could not prevent by the exercise of prudence, diligence and care could be a force majeure event. Depending on the language of their contracts, contractors may have protection from damages caused by a force majeure event.

Industry Forms

Turning to the most common industry forms, the AIA A201-2017 General Conditions form does not mention “force majeure,” “epidemics” or “pandemics.”  The language of Section 8.3.1 (Delays and Extensions of Time), however, still excuses some force majeure events:

“If the Contractor is delayed at any time in the commencement or progress of the Work by (1) an act or neglect of the Owner or Architect, of an employee of either, or of a Separate Contractor; (2) by changes ordered in the Work; (3) by labor disputes, fire, unusual delay in deliveries, unavoidable casualties, adverse weather conditions documented in accordance with Section 15.1.6.2, or other causes beyond the Contractor’s control; (4) by delay authorized by the Owner pending mediation and binding dispute resolution; or (5) by other causes that the Contractor asserts, and the Architect determines, justify delay, then the Contract Time shall be extended for such reasonable time as the Architect may determine.”

Arguably, delays caused by COVID-19 may fall within several of these categories, including “unusual delay in deliveries,” “unavoidable casualties,” “other causes beyond the Contractor’s control” and “by other causes that the contractor asserts, and the Architect determines, justify delay.”

The ConsensusDocs 200-2017 Standard Agreement between Owner and Constructor states in Article 6.3 that “[i]f the Constructor is delayed at any time in the commencement or progress of the Work by a cause beyond the control of the Constructor, the Constructor shall be entitled to an equitable extension of the Contract Time.” It then lists several examples of causes beyond the contractor’s control, including “epidemics.” Other examples that may cover COVID-19 disruptions include “transportation delays not reasonably foreseeable,” “adverse governmental actions” and “unavoidable … circumstances.” ConsensusDocs does protect contractors from delays caused by COVID-19.

Most contracts still require the contractor to mitigate damages and to comply with the notice and claim provisions in the contract. Moreover, the force majeure or act of God event must be the proximate cause of the injury — no other act could have caused the injury and no other act could have prevented the injury.

Practical Tips

Some practical tips for evaluating your exposure to COVID-19 delays and disruptions include:

• Review contracts for:
  • Force majeure language
  • Notice and claim requirements that may be triggered by the response to COVID-19
  • Material price escalation provisions
• Mitigate damages caused by COVID-19, including protecting your workforce from contracting COVID-19, contacting your suppliers to plan ahead and communicating with owners to develop contingency plans;
• Document every delay and how it was caused so you are able to demonstrate that delays were caused by COVID-19 and not any other reason; and,
• Notify the owner and architect in writing when delays occur, taking care to meet contract requirements.