The current health crisis has impacted nearly every aspect of our economy. And while certain construction activities have been deemed to be “essential services” in Maine, many projects have been halted or significantly delayed. Government restrictions aimed at slowing the spread of the Coronavirus have derailed supply chains, limited available workforces, and prevented necessary inspections from occurring. In addition, social distancing and health and safety requirements on the jobsite have further slowed work. In light of these unprecedented challenges, many contractors are left to wonder if these delays can be excused.
The answer to this question likely lies in the parties’ contracts. Construction agreements commonly include force majeure clauses, which are intended to allow for delays and other relief in the event of an unavoidable occurrence such as “an act of God”, natural disaster, fire, act of terrorism, war, and governmental action. Generally speaking, to be classified as a force majeure event, the event must be beyond the control of the parties and cannot be reasonably foreseeable.
There is, however, no universal definition of a force majeure event. Rather, the scope of a particular force majeure clause is dictated by the precise language of the contract itself. For example, force majeure clauses that specifically reference “pandemics”, “disease”, “state of emergency”, or “quarantines” are more likely to be applied in the current circumstances, while clauses that only contain more general phrases, such as “events beyond the Contractor’s control”, are more open to interpretation.
Assuming the force majeure clause applies, contractors must review the notice requirements in their contracts. Contracts often require contractors to provide written notice to the owner of any delays within a certain amount of days after the occurrence of the force majeure event, or alternatively, within a certain amount of time after discovering that the force majeure event may result in a delay. A failure to provide the required notice can result in a waiver of the force majeure remedies.
Contractors that are unable to rely on a force majeure clause may be left to argue that performance or their contracts is impracticable due to the Coronavirus health crisis. “Impracticability of performance” is a legal concept that discharges a party from performing a contract if, due to no fault of the parties, an unexpected and unforeseen event has made performance impracticable. Performance does not have to be made “absolutely impossible” in order for the doctrine to apply, but the event must create more than mere difficulties for the performing party. It is worth noting, however, that this doctrine, in the few times it has been raised in recent times, has yet to be recognized by Maine’s Supreme Court. Therefore, contractors should proceed with caution if they intend to rely upon this doctrine as justification for project delays.
Ultimately, it is in the best interests of project owners and contractors to work cooperatively to navigate delay issues and ensure completion of projects. Contractors faced with delay issues, regardless of any contractual requirements, should notify owners of potential delays and seek to quantify the scope and impact of the anticipated delays. By exchanging this information, the parties may be able to negotiate reasonable extensions of deadlines and keep the project progressing, even in light of these unprecedented challenges.
Perkins Thompson regularly helps owners, contractors, and subcontractors with delay claims and related issues. If you would like to speak with the firm about these issues, you can send an email to Joe Talbot or call him directly at 207-774-2635.