The likelihood is that contractors will be entitled to an extension of time, but if it is granted it will be a neutral event so no costs can be recovered by either party, but is a time extension set in stone?
You will have seen a number of articles online about how the pandemic is a force majeure which should allow the contractor to escape from the liability of delay. We have seen firms in recent weeks using the pandemic to escape from the blame of delay or worse repudiatory breach, but is this set in stone?
The Government has been wishy washy about whether construction projects can proceed, construction has been classed as essential and with social distancing in place it can. The position has now perhaps changed after the Prime Minister’s speech (10th May) where he clarified that construction most definitely can proceed. There is no doubt that labour, plant and material sourcing has been difficult, but it has been possible and many sources are open for business. So does this change the entitlement to an extension of time for the pandemic?
Is there now an argument that as work can proceed, is the force majeure claim nullified? What is the status contractually? Where is the line drawn in the sand?
The fact is most construction projects where social distancing can be done probably now have no excuse for delay, each case however will be on its merits, depending on what is agreed in the contract or what was agreed at the outset of the lockdown. There will be examples where there are occupiers where work will not be possible and others where no individuals are affected, the former is likely to be a situation where an extension of time is allowed and the latter may not have that privilege. Again it all depends on the contract and external factors, it will not be straightforward as all construction contracts are different. If it is found there is no extension possible then it may be held that a repudiation has occurred, which could be a disaster.
If you are a Contractor, are you really at risk of
breach for delay and repudiation?
Going back to the top of this article, the view now is that nothing is set in
stone where an extension of time is concerned in the current climate, that
means a risk of damages or liquidated damages for delays or damages for
abandonment/repudiation of the works. It is difficult to see what the
outcome might be from here onwards and if such disputes are likely you need to
be prepared. Contemporaneous evidence of actions and deeds will be essential
and a check on your current contractual position is advised.
If you would like any guidance or advice, please contact us on
advice@arbicon.co.uk or call 01733 233737.