The construction industry can, from time to time, suffer from supply chain and other unforeseen issues as a result of external factors. In this regard, the coronavirus is impacting construction projects and SJA is assisting clients to prepare and manage for these impacts.
In these situations, it is important that clients and contractors review and understand their relevant Contract Provisions with the assistance of their legal advisers, if necessary. In instances where a construction contract is absent of an express term addressing the risk of infectious disease outbreaks, such as the COVID-19 virus, parties may need to rely on alternative provisions such as loss and expense and extension of time clauses (force majeure/frustration), to establish who may bear the risk to the project. The contract should be reviewed to determine where the parties may be able to source relief, keeping in mind that in some cases this may not be possible.
With an understanding of the relevant contract provisions on board, the parties should assess their respective risk positions with a view to identifying potential exposures with respect to time and cost.
In line with good practice, it is also important that rigour is applied to ensure:
1. Communication between the parties remains open with measures put in place to mitigate any impact being constantly under review
2. Record keeping is up to date and detailed records are kept of delays, disruption and other impacts caused by the impact
3. Construction programs are accurate, regularly statused, maintained in accordance with the contract and reviewed on an ongoing basis
4. Contract administration is diligent and contractual notices are timely and on point
This is not the first time a disease outbreak has disrupted the construction industry and it likely will not be the last. In order to safeguard against project risk and uncertainty, it is essential that that agreed contract terms effectively deal with the potential for such events.
