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Construction: the contract remains king – but we all have a part to play

In the absence of clear guidance from the government and the construction industry pushing for sites to remain open, the contract remains king. But should it be this way? And is that safe? David Morris looks at all the issues.

Open for business

The construction industry remaining open leaves matters in a mess. Leading construction bodies wrote to the government earlier in the week pleading for them to allow construction sites to remain open, but some big employers and developers have closed sites – Taylor Wimpey have just announced their sites are closing – some are completing essential work, and others are carrying on regardless.

Labour is affected, as some of the labour force are self-isolating, some are heeding the government’s ‘stay at home’ measures, some aren’t listening so are going to work and others can’t afford not to. The Construction Leadership Council has published Site Operating Procedures to implement social distancing and reduce infection, but is that possible on construction sites? Many workers are often in tight spaces, and we all saw images of packed tubes this morning; most of those travelling were construction workers who were certainly not following or able to follow those procedures.

The supply of materials is also affected as suppliers are following suit. Some large suppliers have closed while others remain open.

Today

This morning I’ve had enquiries from clients on both sides of construction contracts asking for advice on next steps, with some contractors leaving site and others being told by their employers that their travel is essential. In the absence of clear guidance, the contract provides the terms under which parties must operate, and these will vary considerably.

Generally, contractors will have to carry on and complete the work regularly and diligently and also use all reasonable endeavours to minimise delay. As many are self-employed, in the absence of a government support package for the self-employed (potentially arriving this week), if they don’t risk travelling and working, then they don’t get paid. Though the government has told people to stay at home (and only travel to work if they cannot work from home), it seems the majority of construction workers are today seeing their travel as essential to get to work so are doing so. That would though go against the overarching aim of the government’s measures, which is to halt the spread of the virus.

Force majeure and frustration

If contractors were to turn around and tell their employer that they are not going to work, most will have to cite force majeure – in the absence of specific ‘pandemic’ wording, and only if there is a force majeure clause in their contract. For a force majeure event to be found to have occurred it must have been beyond the control of the party relying on the clause, and it will suspend the obligation to perform the contract. This would be the most sensible way forwards, but it all goes back to the contract, and there will be an argument the other way. Interestingly, a Chinese government-backed agency issued over 3,000 force majeure certificates because of coronavirus in February 2020, but these had varied success when invoked by the respective parties.

In the absence of a force majeure clause, parties are left with frustration, which is notoriously difficult to prove. Frustration will bring the contract to an end, but only where the contract is rendered physically or commercially impossible to fulfil at the fault of neither party.

Where now?

Currently, as many employers want their work completed on time and to budget, and many contractors want to work, until parties are truly told to cease all ongoing works, some are likely to continue, but so then is the spread of coronavirus and the burden upon the NHS.

The most sensible way forwards for all parties is to follow the lead of some in the profession and close sites, for the safety of all, putting contracts on hold until the government’s measures are relaxed.

What is certain is that when we are back into the construction works as we knew them again, the cost of these times will become clear. If common sense prevails, perhaps the collaboration will continue in the completion of the works to the benefit of all parties, but it could be difficult to avoid some significant disputes as each party from suppliers to the employers seek to avoid their share of the cost.

My advice?

I would advise you to speak to your employer, speak to your contractor, speak to your supplier and gather their thoughts. The goal right now has got to be for our nation to make it through this period with the lowest casualty rate possible. We all have a part to play in that.

If you want to cease work, cite the government guidance and document those discussions. Likewise, if you are seeking to perform your contractual obligations, keep records of your discussions, keep labour and supply records, and record any efforts to make up for difficulties so you can show that you are doing all you can. There is little more you can do at this stage.

 

And please stay safe. If you are at all uncomfortable or uncertain about the provisions of your contract or the options ahead, please don’t hesitate to contact a member of our team. Please call 0117 906 9433 or email enquiries@gregglatchams.com  

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

Categories: Construction | Dispute Resolution | Licensing & Regulatory

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