CORONAVIRUS (COVID-19) AND FORCE MAJEURE
While the Coronavirus pandemic has undoubtedly upended all aspects of life, the construction industry in particular has been hard hit. With governmental regulations continually being updated, many construction companies have found their ability to continue working severely restricted or have had their projects completely shuttered..
Looking forward to the day that construction is once again permitted to recommence, it is likely that some projects will experience a number of claims related to the considerable delays caused by the shutdown. These claims may well turn on whether the impacted contracts contain a clause commonly referred to as “force majeure.”
Force majeure is a French term that literally means “greater force.” It is most commonly referred to as an “act of god.” Generally, a force majeure clause in a contract will excuse performance by a party if the circumstances that are preventing performance are unpredictable, unavoidable and are beyond the control of the parties. Such clauses are narrowly interpreted by the court and are typically required to include the specific event that is claimed to have prevented performance. Common triggering events for a valid defense of force majeure include acts of god, earthquakes, floods and political events. It will be up to the courts whether or not the current government imposed shutdowns due to the pandemic will be considered a force majeure event.
It is important to note that a party relying on a force majeure clause to excuse performance bears the burden of proving that the event qualifies. Failure to do so can result in a finding of breach of contract.
During this time, contractors should review their contracts to become familiar with any force majeure clauses that may be included. It is also recommended that contractors be sure that they are complying with any notice requirements with respect to extensions of time, delay claims and possible insurance coverage.
This article was authored by Nathan Shook, a member of the New York construction law firm of Giannasca & Shook, PLLC. This article is for general information only and should not be construed to contain all information necessary to address all matters discussed above. Please contact our office for any specific matters on which you may need professional legal advice.