Editor’s Note: Tom Olson of Olson Construction Law, an ACPA member, sent the following information to clients and others.We thought it was worthy of sharing with all ACPA members and other ACPA TODAY subscribers. Special thanks to Tom for sharing this important and timely information.
At this unprecedented time, construction businesses must evaluate their contractual rights and obligations in order to mitigate the impact of the COVID-19 pandemic. With regard to any delays, suspensions of work, and/or terminations that occur as a result of the outbreak, we recommend the following:
Delays–If your work has or will be delayed as a result of the outbreak, review your contract to determine whether and when you are required to give formal notice of delay, as well as any corresponding documentation related to the impact of the delay (i.e. schedule updates, cost information, notice of claim, etc.).
Suspensions of Work–If the owner/engineer suspends any work you are contracted to perform as a result of the outbreak, review your contract to determine what you need to do in order to preserve your right to any corresponding increases in contract price or contract time. Many contracts require you to provide your requested contract adjustment within a set period of day after you receive notice to resume work.
Termination–If any of your work is terminated as a result of the outbreak, you are most likely entitled to payment for any completed and accepted work prior to the date of termination (including overhead and profit or OH&P, any expenses you incurred prior to the date of termination (including OH&P), and any other expenses directly attributable to the termination. While you are unlikely to recover loss of anticipated overhead, profits or revenue, make sure you review your contracts to ensure you provide any required cost proposals, back-up documentation, etc. as required by the contract.
Force Majeure–Some contracts also contain what is known as a “force majeure” clause. This type of clause relieves one or both sides of their obligations if they are unable to perform due to some massive and unforeseen event beyond their control; classic examples include fires, earthquakes, floods or wars. Review your contracts to determine if any such language applies to the current COVID-19 pandemic, whether any notice provisions apply, and whether your contracts may be impacted.
In addition, in order to efficiently navigate this ever-evolving situation, we recommend that you remain in close communication with the owner/engineer to help ensure everyone’s expectations are in line with one another.
However your work is ultimately impacted by COVID-19, it is important for you to remain proactive and investigate your contractual rights and responsibilities sooner rather than later. And, for any future work you plan to bid during the outbreak, make sure there is written clarification regarding the potential impacts of COVID-19 before you submit your bid. Since these future contracts will be entered into after the pandemic became “known,” you may be assuming responsibility for any related delays or disruptions to your work.
For additional information or questions, please contact Thomas R. Olson, Olson Construction Law, P.C., 1898 Livingston Avenue, West Saint Paul, MN 55118. Call 651.298.9884 or visit olsonconstructionlaw.com.