COVID-19 and Construction Contracts

March 30, 2020 | Riccardo Del Vecchio, Dražen F. Bulat

Review your agreements, document project events encountered due to COVID-19, and respect contract (and notice) rights and time periods

We are indeed experiencing unprecedented times. The potential legal impacts of COVID-19, including government measures taken in response to the pandemic, are real and growing for stakeholders in the construction industry. The impacts relate to issues including but not limited to health and safety, labour and supply shortages (and supply chain disruption), and managing project delays and claims.

Given the new current climate and potential implications, it is important for stakeholders in the construction industry to:

  1. Closely and carefully review your contracts/project documents and/or financing documents to identify and understand the rights, obligations, and risk allocation among the parties during a force majeure event (including to ascertain whether or not concepts such as pandemic, infectious outbreak, communicable disease, and government action are captured (triggering events)), and how the concepts are defined.
  2. Immediately identify and document project events related to the COVID-19 pandemic and their impacts on your construction project and the delivery of construction services and materials.  It is important to keep detailed daily records of such events and their impact, including having such information recorded in project communications and progress reports. It is especially important to identify the commencement of any delay experienced.
  3. Respect and comply with the notice provisions stipulated in the contract/project documents – including how and when you must provide notices and what particulars must be included. The filing of O. Reg. 73/20 with the Registrar of Regulations on March 20, 2020 only changed statutory time periods and not contract rights/time periods, and contracting parties must ensure notices are given within the contractually-stipulated timeframes.

To the extent that you are experiencing or will experience, among other things, decreased productivity on site, the inability to perform certain project tasks, and/or material shortages due to COVID-19, including due to government and project measures taken in response to the pandemic, we are here (even if working remotely) to help assess your rights and obligations, including:

(a)  helping you determine whether a contractual notice of delay may be given (is appropriate); and

(b)  exploring issues around delay, contract time, and contract price, including whether time and price issues are at play and whether delays may be compensable.

 

Miller Thomson is closely monitoring the COVID-19 situation to ensure that we provide our clients with appropriate support in this rapidly changing environment. For articles, information updates and firm developments, please visit our COVID-19 Resources page.

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