Coronavirus: A Contractual Analysis

It is likely that COVID-19 will affect many Construction Projects throughout the UK.

Whilst the Government’s advice is in effect to “Keep Calm and Carry On” it is hard to see how the Construction Industry is not going to be affected.

Even if the country, or at least major cities are not put in “lockdown” it is clear that self-isolation and restrictions on travel (if not movement of goods) between the UK and other countries will have a major impact on most countries and supply chains.

Read your Contracts

The first thing you need to do is check your existing contracts.

Our view is that the effect of the possible disruption could, depending on its actual impact on a project, amount to force majeure.

If your contracts are unamended, this would be a Relevant Event under JCT and a Compensation Event under NEC.

Whilst under JCT this may only give rise to an Extension of Time, under NEC there may be a claim for loss and expense.

Therefore, you need to check:

1. Have any of your contracts been amended?
2. Has Force Majeure been defined?
3. Do you need to serve a Notice of Delay (JCT) or Early Warning Notice (NEC)?

Recording the causes of delay

It is not enough to notify of delay due to COVID-19.

You need to identify the causes of the delay. This requires you to keep accurate and detailed records which must as a minimum include each and every instance of:

• Late issue of design or instructions from the Employer’s Professional Team
• Late delivery of materials
• Inability of key personnel to attend the project (home office or site) due to the need to self-isolate
• Disruption to travel
• Closure of the site or any other key location

where such delays are as a result of COVID-19.

Entering New Contracts

You must ensure that amendments to upstream contracts preserve your rights to extensions of time, and where appropriate loss and expense.

You should also be aware of the consequences of force majeure in your downstream terms and conditions. Any qualifications downstream should be as a minimum back to back with those agreed upstream.

If you have any concerns or require us to review your contracts for you, please contact any member of the team as follows (all phone numbers are forwarded to our mobiles when we are out of the office):