Mar 16, 2020
Earlier this year when the World Health Organization declared COVID-19 to be a global pandemic, freelance writer John Bleasby reviewed the possible implications for the construction industry, including how government restrictions might trigger force majeure provisions in contracts. In discussing the topic, Bleasby relies on the expertise of three lawyers from Osler’s National Construction and Infrastructure Group, partner Danna Donald, partner Elliot Smith and associate Jagriti Singh, and an article that they co-authored about the impact of COVID-19 on construction projects.
As Bleasby explains, force majeure is defined as a provision in a contract that excuses “a party from performing its contractual obligations when it becomes impossible or impracticable due to an event or effect that the parties could not have anticipated or controlled when the contract was signed.”
While not all contracts mention epidemics and pandemics specifically, Donald, Smith and Singh suggest that COVID-19 might still fall within the definition of force majeure: “This is the case in the Canadian Construction Documents Committee (CCDC) 2 stipulated price contract and the CCDC 5B construction management contract,” they write. “In those circumstances, COVID-19 could potentially still qualify as a force majeure if the definition includes open-ended language covering any other causes beyond the party’s control (which is the case in the CCDC documents).”
The repercussions of force majeure vary from contract to contract.
According to the Osler lawyers, “The consequences under a construction contract for a force majeure event include relief from the performance of contractual obligations along with an extension of time for any obligations to achieve milestone dates, such as substantial performance. In the case of a prolonged force majeure event, some contracts may permit one or both parties to terminate without liability. In the event of a force majeure, relief is allowed for any milestone dates.”
Read John Bleasby’s full article, “Legal Notes: Could COVID-19 trigger ‘force majeure’ in contracts?”.