ConsensusDocs has created a COVID-19 Resource page to help you navigate construction disruptions dramatically impacting construction contracts.
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COVID-19 Related Articles
First, you should review what is in your existing contract for force majeure language and other relevant contract provisions. ConsensusDocs agreements, which you can request a free sample contains the most detailed force majeure clause in standard construction contracts. The American Institute of Architects (AIA) A201, Design-Build Institute of America (DBIA), The Engineers Joint Contracts Documents (EJCDC) all have clauses that address delay damages that allow for change orders, but most do not specifically use the term force majeure.
The ConsensusDocs 200 Owner and Constructor Agreement & General Conditions, section 6.3.1 explicitly allow for delays that are reasonably due to epidemics as well as governmental actions that provide equitable relief for additional time for delays. The AIA A201 does not specifically note epidemics, but like ConsensusDocs does provide a catch-all that excused delays for reasons beyond the control and not the fault of the General Contractor. The Federal Acquisition Regulation (FAR) also provides a force majeure provision. Most "original" construction contracts, referred to as custom, bespoke, or manuscript contracts, typically have a force majeure clause at the prime level, but many such subcontracts do not.
Contractors and Subcontractors alike need to take care to give notice in accordance within the timeframes and in the form required by the notice provision in their contract. ConsensusDocs requires prompt written notice which is certainly quicker than the quicker notice requirements for regular change orders. When giving notice, you should provide information that not only has a unforeseen event occurred, but you should also demonstrate that such event actually caused delay on your specific projects. A sample letter that General Contractor or Subcontractor would consider is provided here, in this sample notice letter. One clear way to demonstrate causes is a government work shutdown. To track the applicable work restriction laws this link is very helpful [worker restriction orders]. If you are in a state that has declared a stay-at-home order but that construction has been declared an essential industry, you may need to give your workers written information that they can go to work. A sample essential worker certificate is provided.
Other Contract Provisions
- Force Majeure typically provides extra time, but typically not additional money for a time delay. Time would excuse or prevent the assessment of liquidated damages, but not provide additional money for things such as extended general conditions. Consequently, there are other provisions in your contract that you should analyze. This Guide which you can view here, Guidance for COVID-19 Contract Terms, provides information on other contract provisions which may provide equitable relief for time and money.
- A change in law under ConsensusDocs does merit a change order to extend time and money. In addition, a General Contractor is entitled to additional money in an emergency affecting the safety or persons or property. Constructor shall act in a reasonable manner to prevent threatened damage, injury or loss. Any change in the Contract Price or Contract Time resulting from the actions of Constructor in an emergency situation shall be determined as provided in Article 8. (ConsensusDocs 200 3.12.) Furthermore, emergency provisions may provide an avenue for recovery of additional compensation and time related to isolated events, such as shutting down a project for a short period to disinfect a work area after an infected employee leaves the worksite or leasing a larger space to hold project meetings to comply with social distancing requirements.
- Contracts Going Forward Now that COVID-19 is a Foreseeable Risk: A key contractual step recommended going forward in these times of uncertainty is the use of price escalation/de-escalation clauses. Significantly, ConsensusDocs is the only publisher of such a clause. The ConsensusDocs 200.1 Standard Time and Price Impacted Materials Addendum and Schedule A will be made available on all paid subscription packages. These standard provision should be amended to reflect labor costs and safety measures that provide volatile price inputs that are hard to predict for Owners, General Contractors, and subcontractors alike.
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