Construction Contracts Need Amending Post COVID-19 Shutdowns

Businessman signing document

Contractors industry-wide need to consider how COVID-19 will impact their contractual obligations.

October 19, 2020
Richard P. Higgins - Construction Executive

No one could have expected the coronavirus pandemic in the beginning of 2020. True, there were rumblings about a sickness in China that was highly contagious and infecting many people. Death tolls began rising as the world watched in disbelieve. After all, this is 2020. This is not supposed to happen. We should have been able to control the spread of the virus, but we could not. COVID-19 quickly spread throughout the world causing havoc and economic despair.

While some sectors of the construction industry are not as impacted as others, contractors industry-wide need to consider how COVID-19 will impact their contractual obligations. Depending on what happens and what the government decides to do to stop the spread of the coronavirus, project delays, supply chain distributions, lost productivity and work stoppages may continue for months. All of this will impact the contracts that contractors have with owners. Contractors may not be able to preform according to the terms of the contract through no fault of their own. Owners may no longer qualify for the financing needed to pay for the project.

FORCE MAJEURE

According to Investopedia, “force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations.”

Reprinted courtesy of Richard P. Higgins, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Higgins may be contacted at Richard.Higgins@MCC-CPAs.com



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