Covid-19 and potential delays in the Construction Sector
By Finola McCarthy & Alison Bearpark
20 March 2020
It is difficult to predict how Covid-19 will affect the 150,000 people employed in the construction sector in Ireland. Earlier this week, the Construction Industry Federation stated that its members would continue to deploy staff to construction sites while implementing the Government’s guidelines for dealing with Covid-19 in the workplace. It is inevitable that ongoing construction projects may suffer delays due to a shortage of people or an interruption to the supply of goods and materials.
Delays on construction projects are not unusual and most building contracts contain provisions to deal with delay events. While Covid-19 issues will not have been foreseen in existing building contracts, the circumstances may be managed more generally as a variation or an extension of time or force majeure event.
By way of example, in the standard RIAI 2017 Building Contract (with or without quantities) (the “RIAI”) some delay events in clause 30 which may be relevant to Covid-19 delays are (i) the occurrence of a force majeure event (sub-clause (a)); (ii) receipt of an architect’s instruction under the contract (sub-clause (f)); (iii) inability to secure materials or labour for reasons beyond the control of the contractor (sub-clause (h)); or (iv) because of any delay caused by other contractors, artists or tradesmen engaged by the employer (sub-clause (i)).
In the unamended RIAI, “force majeure” is not defined. As the concept of force majeure has no legal definition in common law, the meaning of “force majeure” in the RIAI is open to interpretation by reference to the contract as a whole and what the parties intended. One interpretation is that it refers to circumstances that are beyond the control of the parties and which make performance impossible. The application of force majeure to delays on site caused by Covid-19 will be fact specific and may lead to disputes. Where a definition of force majeure has been included in a building contract, the scope of the definition will indicate whether or not it will cover a pandemic such as Covid-19.
Contractors should note that the RIAI requires delay events to be notified to the architect immediately and in writing. It is advisable that early notification is given with as much detail as possible. However, the standard form RIAI does not make this a condition precedent to an entitlement.
We urge all parties to review the relevant provisions in their building contracts in good time and take practical steps to minimise the potential impact.
If you would like to discuss the above in more detail, please contact:
Finola McCarthy, Partner | E: email@example.com | T: +353 21 4802771
Alison Bearpark, Partner | E: firstname.lastname@example.org | T: +353 1 6054269