COVID-19 Presents Construction Industry with Challenging New Legal Issues
Businesses who are engaged in construction related activities, 无论是公共项目还是私人项目, 包括业主, 承包商, 分包商, 材料供应商, as well as sureties under payment and performance bonds, can expect that there will be new and challenging legal problems resulting from the impact of the Coronavirus. While certain types of projects have been deemed to be essential, 其他人则没有, resulting in job shutdowns and layoffs of employees. 甚至在重要的项目上也是如此, new rules regarding social distancing and other requirements to protect the health of workers may result in the loss of efficiency with an increase in labor costs and a delay in job progress. A loss of key people due to the disease can result in an increase of problems for the project. 新项目的减少, 或者推迟新项目的启动, can have a major financial impact on those companies who need new business to survive.
这篇短文的目的不是, however, to deal, 在一般情况下, with the economic impact of COVID-19 on the construction industry, but to highlight some of the legal issues that may arise as parties to a construction contract seek to meet their contact obligations, or to pursue their contractual remedies against those who do not meet theirs. Although this article principally deals with legal issues concerning contracts relating to construction, some of what is discussed may also have application to other types of contracts, particularly with respect to contracts with government bodies and agencies.
Generally, a contracting party must look to the plain language of the contract to determine its obligations and rights, including those that may arise when dealing with COVID-19-related issues. 因为不同州的法律会有所不同, my remarks will be based on Virginia law or federal law in the case of construction contracts or where the courts in Virginia have followed federal law.
Federal contracts have standard terms and conditions prescribed by the Federal Acquisition Regulations (FAR)[1]. For contracts with the Commonwealth of Virginia, 或其他州级公共机构, 有标准的一般条件[2] and standard terms and conditions for VDOT contracts contained in VDOT’s Road and Bridge Specifications. However, the terms and conditions of contracts with counties, cities and other local public bodies can vary. 在私人建筑中, while there are widely used standard forms of agreement promulgated by the American Institute of Architects (AIA)[3] 以及其他组织, 私人建筑合同, particularly subcontract agreements widely vary in their terms and conditions.
出于这个原因, a party is faced with an issue that is COVID-19-related, should carefully review their contract to see if it can provide a resolution to the issue. 有些合同包含，例如，a 不可抗力 条款, which allows a party to avoid being held responsible for breaching a contract when the breach is caused by unforeseeable and uncontrollable events. 如果合同中包含 不可抗力 条款, it may list an epidemic as such an event. If it does not, whether COVID-19 is covered by a 不可抗力 clause is potentially an issue that a court may have to resolve, and the outcome cannot be predicted at this time.[4]
The law 在一般情况下 regarding the obligations of a party to a contract, and any analysis of whether COVID-19 provides any relief from a party’s obligations under its contract or affects a party’s remedies, should start with what the Supreme Court of the United States has said:
[If] a party charge himself with an obligation possible to be performed, he must abide by it unless performance is rendered impossible by the act of God, the law, 或者另一方. Unforeseen difficulties will not excuse performance. Where the parties have made no 条款 for a dispensation, the terms of the contract must prevail.[5]
Whether a court will excuse a party from meeting its obligations under a contract where performance becomes much more difficult or much more expensive, 但并非不可能, because of the impact of the COVID-19 pandemic remains to be seen. But, 正如最高法院所警告的那样, if the parties have not made a 条款 for dispensation, "必须以合同条款为准.”
Some experts are predicting that the COVID-19 pandemic will dramatically increase the number of claims and disputes on construction projects. The resolution of these new types of claims is going to present new challenges and issues to contracting parties and their attorneys. Yet, 根据现行法律, judges and arbitrators will still most likely first look to the terms of the parties‘ agreement for guidance in resolving C0VID-19 related claims and disputes in addition to any new federal and state legislation or regulations enacted to provide relief from the economic consequences of the COVID-19 crisis.
While it is not possible to mention in this article every type of claim or dispute, 这可能会对COVID-19产生影响, 在一般情况下 such claims may result from delays, 中断和关闭项目, 默认值和终止, 违约金, 未支付已完成工作的费用, 债券索赔的履行和支付, 以及其他违反合同的索赔.
即使这些事件都没有发生, parties to construction contracts should begin reviewing their existing agreements to ensure they contain 条款s which:
- Require written notice to the other party to the contract of any event or occurrence which may increase the cost or time required for performance.
- Describe conditions under which a party can be relieved from its duty to continue performance and/or terminate the contract, i.e. a 不可抗力 供应类型
- Provide for added compensation and time extensions for delays, 对于工作停工, 或者暂停工作.
- Give the owner or other contracting party the right to terminate the contract for convenience and describe what can be claimed as termination costs.
- Provide notice requirement for any claims under a performance and payment bond.
- Provide for 违约金 for late completion of the work.
- Relate to payment and the right of one party to withhold payment.
- Provide how disputes and claims must be resolved, including 条款s for the allowance of attorneys’ fees to the prevailing party.
On public projects or other projects where payment and performance bonds are required, 它们也应该被审查, 如果可用, 承保范围及任何通知要求.
While the CARES Act and some of its 条款s, 比如工资保障计划, may provide some financial relief from the financial impact of the COVID-19 pandemic[6], it does not protect a party from potential liability for claims which may arise as a consequence of COVID-19, such as claims by unpaid 分包商 and suppliers, claims for unreimbursed costs for labor and materials, lost profits on jobs which are shut down or delayed, and contracts which are terminated because of a party defaults because it cannot perform. Because COVID-19 has created unchartered waters in the fields of construction and public contract law, 我和彭德的同事们 & Coward will be looking ahead for potential solutions to some of the legal problems that 承包商 and other parties might face from the impact of COVID-19 on projects they are involved in. 正如我在这篇文章中建议的那样, I believe that contracting parties should not wait until a problem or issue caused by COVID-19 arises, 或者即使它已经出现了, they should take a hard look at their contracts and consider letting their attorney know about the problem.
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[1] Examples of 条款s of the FAR which may bear on COVID-19 related legal issues are FAR 52.249-14 which defines “Excusable Delays” and contains what can be considered to be a 不可抗力 条款 which includes epidemics and quarantine restrictions among the causes of a failure to perform a contract which will be considered to be excusable and will not result in a default by a contractor; FAR 52.242-14. 暂停工作，FAR 52.242-15，停工令，还有FAR 52.242-17, 政府延误工作, which allow the government to suspend or stop the work and provide for an equitable adjustment for any added costs, 但是没有利润, and time for the delay caused by the government,
[2] The Virginia Department of General Services has issued a standard set of General Conditions (DGS-30_054(0415)) for use in contracts with the Commonwealth and agencies of the Commonwealth. In addition to providing strict notice requirements for any claims for added compensation time, they contain definitions of Excusable Non-Compensable Delays, Excusable Compensable Delays and Non-Excusable Non-Compensable Delays, and Compensation/Liquidated Damages for Owner delay. The also give a contractor the right to stop work or terminate a contract if the work is stopped for 90 days “under an order of any court or other public authority.”
[3] Under Article 14 of the AIA General Conditions for Construction, AIA文件A201-2017, a contractor may terminate a contract if the work is stopped by an order of a public body for more than 30 days.
[4] 的案例 Penn Va. Oil & Gas Corp. v CNX天然气有限公司., LLC., 2007 U.S, Dist. Lexis 12206 (w. Dist. Va. 2007) is an example of how a court in Virginia will review a 不可抗力 条款 to determine if it applies to relieve a party from meeting a contractual obligation. See also 戈登维尔能源公司，L. P. v. 维吉尼亚加热器. & Power Co., 257 Va. 334 (1999).
[5] 哥伦比亚R. Power & Light Co. v. Columbus, 249 U.S. 399, 39 S. Ct. 349, 63 L. Ed. 669 (1919), quoted and followed by the Virginia Supreme Court in 弗吉尼亚西部电力公司.v. 克利夫顿福吉市，125弗吉尼亚州. 469 (1919)
[6] 根据《澳门亚洲博彩平台排名》, a federal government contractor may be entitled to an equitable adjustment in the contract price and time of performance for certain COVID-19 impacts.