13 April 2020

Construction Has Stopped: What’s In My Contract?

***Information and guidance in client updates was up to date at time of publication. During the pandemic, information and guidance has been changing rapidly. If you have any questions about the information contained in a client update, please contact the author(s) or your Miller Johnson attorney.***

Whether you are an owner, contractor, or subcontractor, you’ve had to determine if the Governor’s shutdown order delays your construction project. And you’ve had to re-determine that as of April 10, when the latest order took effect.

How does your contract address this situation? Use the following guide to identify your contract rights and duties.

  • Issue: Does COVID-19 or the governor’s order justify relief? Where to look:
    • Delay clauses (sometimes labeling as Force Majeure, Excuses for Delay, and the like). If examples, do any of them cover epidemics? Or a governmental action?
    • Completion deadlines: sometimes excuses for delay are buried here
    • Timing clauses: anything addressing time might also address delay
  • Issue: What kind of relief do I get?
    • More time?
    • More money? Expenses of shutting down and gearing back up (de-mobilization, re-mobilization)
    • Overtime and other expenses of working faster to catch up?
  • Issue: Do I need to give notice? If so, consider:
    • Do the notice rules apply to both required and optional notices?
    • What must the notice contain? How much detail?
    • Who must I notify?
    • When must I notify?
    • What delivery method must I use? What methods are permitted?
    • When is my notice treated as given? When sent, when delivered, etc.
  • Issue: Do I need to make a claim? Look at your claims section to address:
    • Is there a deadline for a contractor’s claim? For the owner’s claim? Is a late claim waived?
    • How must the claim be made? Written notice? Are the notice rules for claims the same as the general notice rules, if any? See the general notice questions above.
  • Issue: Do I need a change order (CO) for relief?
    • Must the change order be in writing (almost always, the answer is yes)
    • What details must the written CO contain?
    • Must the CO be signed before the changed work begins?
  • Issue: Am I looking at all the right contract documents?
    • If a subcontract, what terms from the prime contract flow down? Do they conflict with my contract terms? Which one controls?
    • Does my contract incorporate entirely separate sets of terms?
  • Issue: Do I need to mitigate my losses?
  • Issue: Can the work by suspended? Can the contract be terminated?
  • Issue: Are damages limited in any way, such as with a consequential-damage waiver?

Of course, your situation may implicate other parts of your contract not listed above. Consult with your Miller Johnson lawyer to develop your best strategy. And remember that we’ve been with you since this crisis began. Access our webinars and alerts on the Miller Johnson COVID-19/Coronavirus page.