While the full extent of the looming potential pandemic of the Coronavirus remains unknown, the real or imagined impacts are now being experienced in the economy, as restrictions on travel, voluntary shutdowns and other business restraints mount.
So if these restrictions result in construction delays associated with labor shortages, material delays, health department shutdowns or other impacts, what relief is available?
Most construction contracts contain an excusable delay for “force majeure” clause that entitles the contractor to a time extension (no money) in the event of unexpected circumstances beyond the contractor’s control.
For example, the AIA A201 §8.3.1 provides for a time extension when the contractor encounters causes beyond his control, including “labor disputes, fire, unusual delay in deliveries, unavoidable casualties.” Traditionally, these clauses would justify time extensions due to unanticipated natural events like unusually adverse weather and natural disasters like hurricanes or floods, as well as unanticipated human events like terrorism and industry wide strikes. The contractor must typically show the event was both beyond his control and unanticipated. The spread of the Coronavirus and its disruptions of the supply chain (or worse) appears to satisfy both of these requirements.
Contractors or others seeking time extensions due to the Coronavirus outbreak are well advised to give timely written notice as required under most construction contracts. Remember that while the contractor may be entitled to relief from a contract completion date and assessment of liquidated damages, affirmative delay damages (i.e., extended general conditions) will likely not be recoverable under these circumstances.
