As the coronavirus sweeps across the country and the government demands that all but essential workers stay at home, never has the phrase ‘force majeure’ been so relevant to contractors or employers.
This innocuous term, which is almost an afterthought in JCT contracts, is just as worrying as the virus itself for all connected with construction. A force majeure is the occurrence of an event which is outside the control of either one or both parties and which prevents them from fulfilling their obligations under the contract.
The current government guidelines have an impact on manpower. The virus is spread through the air and by failing to keep surfaces clean. Men working in close proximity, and building sites not being known for their cleanliness, raises the risk of the virus spreading in these situations. It is therefore understandable for contractors to think about standing down their workforce.
As there is no end date for high rates of contagion, contractors can’t be certain whether they will still be able to meet completion dates if they cease work on site. In most JCTs an extension of time can be requested and should usually be granted. However, consideration will have to be given as to how far along the build has reached and what outstanding works need to be done. Government guidelines, industry procedures, and health and safety regulations will also form part of any decision, but it may be possible for work to continue so no extension of time would be required.
In some JCTs there is also the right to terminate the contract due to a force majeure. However, whether it is the employer or the contractor who wants to take this route, there are procedures which have to be followed. A failure to terminate correctly can be costly. Even where termination is effected correctly, the terminating party may owe and/or be due monies from the other party.
Whether there is a request for an extension of time or a party is considering termination of the JCT, neither should be done without deconstructing all the facts as, although there is a need to stop the virus, it may not always mean that construction has to stop or be delayed.
If you wish to discuss this further or have any questions about the legal implications of the coronavirus pandemic on the construction industry, then please call Audrey Lawrence (Legal Director) on 020 7963 8682 or email firstname.lastname@example.org.