The impact of COVID-19 on the construction market is there for everyone to see. The recent emergency surrounding the virus has resulted in a plethora of analysis on the long-overlooked force majeure clause. The harsh reality is that most force majeure clauses in construction contracts do not contemplate a pandemic as part of their construct. This leaves many in the industry at a loss to deal with project delays and shutdowns. Is there, however, another clause worth considering?
Many construction contracts have language in them, allowing for the suspension of work or allowing for a “stop work order”. These are commonly issued by a party with control over the work (i.e., owner to contractor or contractor to a subcontractor). It’s typically done as a way to control a risk, delay things in order to allow time to analyze a problem and solve it, or to deal with an unexpected or unplanned issue. The COVID-19 emergency clearly fits this profile.
In many states, Governor’s and local political leaders have issued orders suspending work on some or all construction sites as a way to “flatten the curve” of the growing pandemic. The orders, in essence, direct owners to shut down their construction projects so that social distancing can be achieved and the spread of the virus stymied. This gubernatorial order then flows down, in theory, to the subcontractors and others lower in the chain of privity. Most importantly, Governor’s issuing these orders have the power to control construction sites and are not giving owners a choice in the matter; and the governmental directives to shut down job sites are effectively suspensions of the project.
It’s certainly not as clean as a force majeure clause remedy, but it might be a creative strategy to help alleviate the stresses COVID-19 is putting on your company. Take a look at your contract to evaluate any clauses dealing with the suspension of work and/or stop work orders. Those working on public projects may have an easier time finding this language than on private jobs, but most contracts of any size have suspension and termination language. If the contract has language that seems like it could be used for this creative approach, follow the notice and remedy provisions in the same agreement – it just might provide you with some relief.
ABOUT JOSH QUINTER
Josh Quinter is a commercial litigation attorney, with a focus on construction law, and an Associate Managing Principal. Mr. Quinter actively works with his clients in the areas of business planning, contract negotiation and project consulting, risk management and dispute resolution, and litigation. His client service and professionalism have earned him the distinction of being named a Pennsylvania Super Lawyer, a Lawyer on the Fast Track, and a Rising Star.
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