Force Majeure and COVID-19 in Construction Contracts – What You Need to Know

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How to understand your construction contract and its potential implications on your business in this season of change.

April 6, 2020
Brenda Radmacher & Jason Suh - Gordon & Rees Construction Law Blog

“Force Majeure” – While most construction contracts contain these provisions, they are often not understood in relation to the implications they may have on construction projects. With the onset of the COVID-19 pandemic, we are all taking a closer look at many portions of our contracts. The following is a brief primer on how to understand your construction contract and its potential implications on your business in this season of change.

What is a Force Majeure?

Construction contracts usually take into consideration that the parties want to agree at the outset on who bears the risk of unforeseen incidents that may affect the project’s progression. These issues are generally handled in a “force majeure” clause. Force majeure, according to Mariam Webster’s Dictionary is a “superior or irresistible force; or an event or effect that cannot be reasonably anticipated or controlled.” To be deemed a force majeure, generally the circumstances must be outside of a party’s control which makes performance impossible, inadvisable, commercially impractical, or illegal. In addition to being unforeseeable, the circumstances must have external causation, and be unavoidable. However, the key to understanding if COVID-19 will be deemed a condition that will excuse a contractor’s performance is the specific language in the provision.

Generally force majeure events are unavoidable events such as “acts of God,” most notably weather conditions including hurricanes, tornadoes, floods, earthquakes, landslides, and wildfires, as well as certain man-made events like riots, wars, terrorism, explosions, labor strikes, and scarcity of energy supplies. However, there is not much case law or specifics on conditions similar to COVID-19.

Reprinted courtesy of Brenda Radmacher, Gordon & Rees and Jason Suh, Gordon & Rees
Ms. Radmacher may be contacted at bradmacher@grsm.com
Mr. Suh may be contacted at jwsuh@grsm.com



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