Many trade contracts contain a clause that may protect trade contractors from catastrophic events like pandemics. These clauses are known as force-majeure clauses (covering acts of God). They basically say if these unavoidable events happen, the contractor is relieved of its obligations to the extent of the impact.
However, many common industry forms have not been updated to specifically address COVID-19. (They may be waiting to see how the courts treat their existing language first.) So to ensure impacts from COVID-19 are covered, a trade contractor should consider expressly adding it to the force-majeure clause. See the example below.
Notably, typical force-majeure clauses do not say the trade contractor gets more money. So an escalation clause could be added to the force-majeure clause.
Here is an example force-majeure clause that provides a time extension and additional compensation for the impacts of COVID-19.
The time for completion shall be extended for the period of delay resulting from causes beyond the control and without the fault of Trade Contractor, including but not limited to Acts of God, fire, tornado, hurricane, flood, earthquake, natural disasters, explosion, embargoes, war, acts of war, insurrections, riots, civil disturbance, labor strikes, pandemics and epidemics (including but not limited to COVID-19), and similar unavoidable circumstances beyond the Trade Contractor’s control (collectively, “Force Majeure Events”). In addition, Trade Contractor will receive an equitable adjustment to the Contract Sum for all additional costs resulting from any Force Majeure Event, including but not limited to increased cost of labor and materials.
Of course, no standard clause can address all unforeseen events or even all impacts of an anticipated event. To the extent risks and impacts are known, they should be specifically addressed – with reference to time and money – in the contract.
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Sources:
- Samuel D. Gregory, My Project Has Been Impacted by Covid-19: What are my rights for time extension, termination, and damages?,” American Bar Association’s Forum on Construction Industry, Aug. 3, 2020.
- Paula M. Bagger, “The Importance of Force Majeure Clauses in the COVID-19 Era,” American Bar Association’s Forum on Construction Industry, Mar. 25, 2021.
- Tony Starr & Lexie Pereira, “Post-COVID-19 General Conditions Revisions for Contractors,” American Bar Association’s Forum on Construction Industry, Aug. 3, 2020.