Coronavirus-related construction delays and force majeure provisions in industry-standard contracts

While contractors have initially been focused on taking care of the health and safety of their workers in the wake of the coronavirus epidemic, the current impacts to the construction industry‘s workforce and the additional safety measures that contractors have begun undertaking is just the beginning. As the virus continues to spread across the country, the impact on the construction supply chain and workforce will almost certainly become greater in the weeks and months to come. As a result, contractors across the country will be evaluating the force majeure provisions of their contracts to determine whether they are entitled to an extension of time or increase in contract price from delays and other impacts related to the COVID-19 epidemic.

Our experienced construction attorneys have spent a considerable amount of time over the last two weeks reviewing force majeure provisions in custom and industry-standard contracts to determine whether the coronavirus epidemic qualifies as a triggering event under the various clauses. Some of the clauses are very useful in the present situation, but others clearly do not allow for an excusable delays associated with the current epidemic.

Some of the industry-standard contracts specifically list “epidemics” as a triggering event, but others, including the AIA A201-2017, only state that delays “outside the control of the contractor” qualify as a force majeure event. Ultimately, whether the COVID-19 epidemic qualifies as a “force majeure event” depends on the language of your contract. We have reviewed all of the commonly-used industry-standard contracts to determine the scope of their force majeure clauses in relation to the current epidemic:

• AIA A201-2017 General Conditions. Only has a catch-all for acts beyond Contractor’s control…as determined by the Architect.
• ConsensusDocs 200 Standard Agreement between Owner and Constructor. Section 6.3.1 specifically lists “epidemics” and “adverse governmental actions” as an excused delay permitting a no cost time extension. Similarly, many of the other ConsensusDocs forms provide similar relief for contractors.
• DBIA 535 General Conditons. Section 1.2.8 defines a force majeure event to include “epidemics” and “other acts of God.” The DBIA 535 further requires the contractor to comply with all orders issued by any governmental entity having jurisdiction over the project.
• EJCDC C-700 General Conditions. Section 12.03 provides for time extension and equitable adjustment to the contract price “due to delay beyond the control of Contractor,” which includes “epidemics.”
• OFCC General Conditions (CMr). Section 8.6.1 provides for “an extension of the Contract Times on account of delay in the commencement or progress of Work on the critical path of as a result of governmental action, epidemics, and labor disputes beyond the CM’s control.
• FAR 52.249-14 Excusable Delays. Specifically provides for no cost time extension for “epidemics” and “quarantine restrictions.”

Also, beware of modified industry standard agreements where the other side has changed the standard terms of the force majeure and/or excusable delay provisions outlined above.

Many of the “stay at home” orders being issued across the nation permitting construction to continue actually make it more difficult to argue that the circumstances surrounding the current coronavirus pandemic trigger force majeure clauses unless the force majeure clause contains specific language referencing “epidemics“ as a triggering event or a broad exemption to all circumstances beyond the contractor’s control. In the states where the executive orders broadly exempt all construction, those orders eliminate another potential triggering event commonly listed in force majeure provisions—governmental action. So, Whether or not a force majeure clause has been triggered by recent events must be evaluated on a case-by-case basis and these provisions should be reviewed in conjunction with any executive orders issued by the state where the project is located.

Contact one of the attorneys listed below if you have questions about whether the force majeure clause of your contract provides potential relief from delays on your construction project resulting from the coronavirus epidemic.