Common contract clauses
These include:
- Force majeure clauses – these commonly provide for time, but not money;
- Change in law clauses – these may provide for time and money, but will usually require a “direct” impact on the Works; and/or
- The exercise of a statutory power – this is slightly wider than a change in law, and it may be sufficient that there is a direct impact on the execution of the Works, and not necessarily on the Works themselves.
At the same time, contractors will be expected to mitigate the impact of any COVID-19 effects by taking reasonable steps to minimise or prevent delay.
Contractors will also need to be able to explain and prove how the relevant event caused the delay and/or cost. This will not be straightforward, particularly where delays are caused by delays in the supply chain, or result from a number of overlapping events.
What is clear, particularly following the Government’s recent change in emphasis, is that COVID-19 and the related government laws and guidance will not on their own justify stopping all work on site (although in some cases this may be unavoidable). Instead, it will be necessary in every case to consider whether, how and to what extent it might be possible to proceed with work on site, and carefully document the decisions taken with reasons.
By way of illustration, the following may all be treated differently and may give rise to different entitlements:
- Delays caused by members of the workforce self-isolating;
- Delays caused by supply chain absences;
- Delays caused by the introduction of social distancing measures (e.g. the 2 metre rule, additional hand-washing facilities, and cohorting);
- Delays caused because it is not possible to continue work on site, having assessed and managed the risks to the workforce as a result of the threat posed by coronavirus;
- Delays caused by the interaction of reduced numbers on site and other health and safety obligations;
- Delays caused by confusion arising out of the status or effect of government guidance.
Force majeure
If the contract includes a force majeure clause and defines what is meant by “force majeure”, that definition will be effective and it should be clear whether it includes pandemic.
If there is no definition in the contract, the meaning of “force majeure” will be derived from the wider context of the clause and the contract. This phrase has no generally accepted meaning in English law.
It is possible this will be tested this year, in the context of coronavirus. In the meantime, the precise meaning and effect of the term is uncertain but it seems likely that it will, in most cases, include the coronavirus pandemic.
Clearly, it may be difficult (though not impossible) to argue that works have suffered a force majeure event when the UK Government has been issuing clear guidance for construction sites to stay open.
Anyone seeking to claim time as a result of force majeure should consider and document precisely how the fact of coronavirus has delayed the works. If it is possible to safely continue some activities either off site or on site, with appropriate adjustments, this should be done.
