COVID-19 Clauses in Construction Contracts: What You Need to Know

The COVID-19 pandemic has brought a new level of uncertainty to the construction industry. As a result, many construction contracts are being revised to include COVID-19 clauses. These clauses can help protect both parties in the event of project delays or interruptions caused by the pandemic.

Here’s what you need to know about COVID-19 clauses in construction contracts:

What Are COVID-19 Clauses?

COVID-19 clauses are contractual provisions that address the potential impact of the pandemic on construction projects. These clauses can cover a range of issues related to COVID-19, including delays, disruptions, supply chain interruptions, and changes to safety protocols.

Why Include COVID-19 Clauses in Construction Contracts?

COVID-19 clauses can help protect both contractors and owners from the financial and legal implications of project interruptions caused by the pandemic. By outlining clear expectations and responsibilities, these clauses can help reduce uncertainty and minimize disputes between parties.

What Should Be Included in a COVID-19 Clause?

A COVID-19 clause should address the potential impact of the pandemic on the specific project in question. Some key elements may include:

– Definition of a force majeure event: COVID-19 clauses should explicitly define the circumstances in which a force majeure event can be invoked. This might include government-mandated shutdowns, supply chain interruptions, or labor shortages due to illness or quarantine.

– Notice requirements: The clause should specify the notice requirements for both parties in the event of a potential or actual force majeure event.

– Mitigation efforts: The clause should outline the steps that both parties must take to mitigate the impacts of a force majeure event, such as finding alternative suppliers or implementing new safety protocols.

– Cost allocation: The clause should set out how costs associated with a force majeure event will be allocated between the parties. This might include provisions for sharing costs or for a change in the contract price.

– Schedule adjustment: The clause should address how the project schedule will be adjusted in the event of a force majeure event. This might include a revised completion date or a suspension of the project until the event has passed.

– Termination rights: The clause should outline the circumstances under which either party can terminate the contract in the event of prolonged or significant impacts from a force majeure event.

Are COVID-19 Clauses Necessary for Every Construction Contract?

COVID-19 clauses may not be necessary for every construction contract. However, they can provide an added layer of protection in uncertain times. If your project is likely to be impacted by the pandemic, adding a COVID-19 clause to your contract can help reduce the risk of disputes and protect your interests.

In Conclusion

COVID-19 has brought unprecedented challenges to the construction industry. As a professional, I recommend that you discuss the potential impacts of the pandemic on your project with your legal and financial advisors. Reviewing your contract and potentially including a COVID-19 clause could help protect both parties in the event of a project interruption caused by the pandemic. By addressing key issues up front, you can help reduce uncertainty and mitigate the risk of legal disputes.