Like everyone, we are closely monitoring the COVID-19 outbreak and the related impact on our construction clients. With the ever-changing environment related to the rapid spread of this virus, it is likely that many construction projects will be delayed or stopped based upon changes to the available workforce or government mandate. With the numerous associated challenges our clients are facing, one issue that could slip through the cracks is the requirement in many construction contracts that you provide notice of any Force Majeure event.
A Force Majeure event is one that: (1) is outside your reasonable control; and (2) prevents, impedes or delays your ability to perform your obligations under your contract. Generally, you must also show that you have taken all reasonable steps to avoid or mitigate the event or its consequences. Based upon these criteria, it is very likely that COVID-19, an unprecedented pandemic (as labelled by the World Health Organization), would be considered a Force Majeure event.
Most construction contracts require you to give notice of any Force Majeure event that occurs, otherwise, you may be deemed to have waived your rights to an extension of time or to additional compensation as a result of the COVID-19 outbreak. Therefore, whether required by your contract or not, we recommend that our clients be proactive and issue a notice to all clients now. We have provided a basic outline for notice below, but please feel free to contact us regarding any project-specific notice requirements in your contracts.
Notice of Force Majeure Event
(Insert Project Name/Description/Address)
Dear Client:
We are closely monitoring the outbreak and spread of COVID-19 and the impact it may have on our business and our clients. We are working to continue providing and delivering the same level of work and service you have come to expect while remaining in compliance with all guidelines issued by municipalities, counties, states and the federal government.
At this time, it is reasonable to expect that the COVID-19 virus will have an adverse impact upon our ability to continue providing labour and materials to your project and timely perform all of our obligations under our contract. The scope of this potential impact is currently unknown. We can expect a reduction in available labour due to policies requiring social distancing and self-isolation to prevent the spread of the virus. In addition, the impact on our supply chains for materials, many of which are shipped from overseas, may be severe.
Therefore, we write to provide notice that we consider the COVID-19 outbreak a Force Majeure event in relation to the Project. As a result, to the extent permitted by our contract, we reserve all rights to: (1) an extension of time-based upon any delay to the project caused by COVID-19; (2) additional compensation based upon costs incurred related to any delay to the project caused by COVID-19; and (3) additional compensation based upon increased costs of materials.
While we provide this notice as a precaution, we assure you that we are doing everything in our power to avoid any delays or increased costs to the project, while remaining compliant with the directions, guidelines and requirements issued by municipalities, counties, states and the federal government.
We will continue to share information as it becomes available and do our very best to keep you informed about any further actions as it relates to your project. If you have any further questions, please feel free to contact me directly
