COVID-19: The top 5 things to look for in construction contracts

1. How are COVID-19 pandemic impacts addressed in the contract?

For contracts finalized pre-COVID-19, the impacts of the pandemic are most commonly captured by the existing force majeure clause. Post-COVID-19, the trend has been to move COVID-19 out of the force majeure clause to its own section. This makes sense. Even though many elements of a typical force majeure clause would apply to the pandemic, the remedies applicable to COVID-19 impacts as well as some contractual elements may be different.

For an existing contract, it’s necessary to identify all of the possible clauses throughout the contract that may be triggered, not just the force majeure clause. For example, governments and public health officials have responded to the pandemic in a number of ways, including by issuing stop work orders and new health and safety requirements like physical distancing and the use of PPE. This has contractual implications (e.g., GC 6.5.2 of the CCDC 2 and CCDC 5B forms of contract deal with stop work orders, and some parties have claimed the pandemic has triggered a contractual change in law). For a new contract, if drafting a clause to deal with COVID-19, it is usually a good idea to bring all of the relevant contractual provisions together in a single section so the contract is easier to administer and to help make it clear that there are no other contractual remedies elsewhere for COVID-19 impacts. This prevents parties from trying to pick another clause that is more advantageous to them.

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