“Just like all of these aspects of our everyday life, the coronavirus could certainly have an impact on construction projects at home and abroad. Construction projects always have a ‘time for completion’ component and many contractual provisions may certainly come into play in any construction project which is affected by labor shortages from the coronavirus. Most construction contracts for large projects, including the typical AIA forms, have provisions making time of essence to the contract and certainly the scheduling of the contractor’s work is of utmost importance to most contracts,” Keester says.
CAUSE FOR DELAY
“With the emergence of the Coronavirus, and expected labor shortages as a result, I would expect that many construction projects will be impacted. I also suspect that the lawyers for contractors and owners will be reviewing the contracts of their clients to see what they’ve agreed to do and what contractual rights and duties exist in light of the conditions caused by the spread of the Coronavirus. There are many terms that will be relevant to those discussions, including the various contractual terms relating to the contractor’s schedules, substantial completion, delays, liquidated damages, and other contractual provisions. Many will be reviewing their agreements to see if their timely performance is excused by the labor shortage caused by this virus. One exemplary provision that is pertinent to this issue is ‘§8.3 of the General Conditions of the AIA Forms, e.g., A-201-2007’. That provision deals specifically with delays and extensions of time and gives certain excuses to the contractor for delays caused by certain events. This provision, for example, allows that certain stated delays of the contractor may be excused and may justify extensions of the Contract Time by change order. These include delays caused by ‘unusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor’s control … or … other causes that the Architect determines may justify delay’…,” Keester says.
“I foresee much argument over provisions like the ones mentioned above and excuses to the contractor for shortages in his labor forces caused by the Coronavirus. There will be discussions between contractors, architects, construction managers and owners regarding the impact of this virus, and the various contractual provisions regarding delays, substantial completion, force majeure events and, potentially, even whether such labor shortages give the owner a good excuse to invoke the ‘Termination for Convenience’ clause of the contract in order to find and hire a contractor who can provide sufficient labor force to complete the project in a timely manner,” Keester says.
About the author:
Michael Keester is a shareholder/partner at the national law firm Hall Estill in its Tulsa office who has three decades of experience in complex business litigation. Keester says everyone from contractors to architects and construction workers need to think about the potential impact of COVID-19.
Modern Contractor Solutions, March 2020
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