by Mike Laramie
The COVID-19 pandemic has halted construction projects throughout the U.S. economy. In these difficult times, BSP attorneys understand the challenges facing our construction clients and can help them navigate those difficulties. We know that our client-partners in the construction industry are dealing with an array of hurdles, including:
- “Shelter In Place” Compliance
- An ever-growing number of states and municipalities have issued stay-at-home mandates. These orders drastically affect labor for construction projects and have specific criteria as well as exceptions, such as critical-infrastructure personnel, necessary service providers, or workers necessary to maintain minimum basic operations.
- Force Majeure Terminations
- A force majeure is an unforeseeable event that makes performance impracticable or impossible and excuses a contractual obligation. Examples of such events often include tornadoes, earthquakes, war, and other disasters. A contract may contain a force majeure clause which defines such an impracticable circumstance as well as who bears the risk of loss for it, or applicable principles of contract law will dictate a result.
- Supply Chain Disruptions
- With many labor shortages, travel bans, and shipping restrictions in place, some builders and contractors are scrambling to obtain project materials. A contract may instruct supplier allocation, or an applicable statute may require a supplier to fairly allocate production among its customers.
- Contractual Non-Performance
- As the effects of COVID-19 ripple into construction commerce, builders are dealing with claims of non-performance and questioning how they can accomplish performance themselves, given labor and supply obstacles as well as government mandates. An analysis of the terms of the applicable contract will help determine whether performance is enforceable or required. Oftentimes, increased costs or lost profits by themselves will not excuse performance.
- Delay Claims
- Again, the risk of loss for delays will likely be determined by the parties’ contract. Some factors that will affect delay claims include: a liquidated-damages clause, whether a delay is due to legally recognized impracticality or impossibility, and business interruption insurance. A timely analysis of a contract as well as the prompt notice or response to the involved parties is needed in order for a builder to protect its rights.
In these difficult times, BSP’s construction attorneys can help their clients navigate through the business challenges presented by COVID-19.