Tips for the Construction Industry Dealing with COVID-19

Local and municipal governments in North Carolina are increasingly issuing “Stay at Home” orders requiring citizens to stay at home while the COVID-19 virus swirls.  Almost universally, these Orders are exempting construction industry trades (both commercial and residential) as “essential businesses and operations.”  Essential businesses are NOT prevented from operating and are encouraged to operate and remain open provided social distancing requirements are enforced to the extent reasonably possible.

Even while construction continues in the wake of COVID-19, it can only be expected that problems for contractors and subcontractors on construction projects will arise including unavailability of labor, material and equipment shortages, and delays in delivery of equipment and material.

Such eventualities could cause delays, suspensions of work, and even termination of contracts. All of these should be at least addressed in your contract or subcontract. It is important to review your contracts for provisions which may provide relief in the event your project is impacted. These provisions include force majeure, delay, suspension, and termination. “Force majeure” provisions may excuse a party’s performance obligations when certain events or circumstances beyond that party’s control delay performance or make performance commercially impracticable, illegal, inadvisable, or impossible.

Within these contract provisions, you may find answers to questions such as:

  1. Is COVID-19 an excusable delay (NOTE: epidemics entitle contractors to extensions of time in the ConsensusDocs delay and extension provision)?
  2. Am I entitled to damages for delay?
  3. Can my contract be terminated for convenience?

Subcontractors should also be aware that more often than not, its subcontracts will contain flow down provisions incorporating by reference the terms of the prime contract between the general contractor and owner.  If your subcontract is silent or does not contain any of these provisions, they may be included in the prime contract. If your subcontract has a flow down provision, make sure to request a copy of the prime contract and review it carefully so that you are aware of its terms and can comply with any notice requirements to preserve your rights and remedies.

If you are in need of navigating the specific language of your contract, crafting notices regarding delays, or other advice regarding the effects of COVID-19 on your business or project, please contact Anderson Jones attorneys Todd Jones or Lindsey Powell by email or (919) 277-2541.