On a Proper Construction – Issue 4 (What residential builders must do now to minimise risk exposure from delays arising from COVID-19)

25 March 2020

Sailors well know that “time and tide wait for no-one”. The same is true of time limits in construction contracts. Unless you’ve been living under a rock (or in the Big Brother house) you’ll have noticed the significant impact COVID-19 is having on the way we live and work. However, as we explain below, that does not mean that builders can do-away with good contract administration. In fact, the reverse is true, now, more than ever, builders should make sure that they are sending all of the notices required under their contracts.

Residential building contracts usually contain provisions which, in general terms, entitle a builder to claim extensions of time where delays are encountered as a result of matters outside of the builder’s control. The terms of the contract will set out the specific requirements for claiming such extensions. Failure to adhere to those requirements could result in:

  1. The extension of time claim being disallowed; and/or
  2. Liquidated or general damages flowing for failing to complete the work within the required time.

Builders ought not be fooled into thinking they don’t need to formally notify owners of delays encountered on their project as a result of COVID-19 because everyone is all too aware of the pandemic. Builders and owners alike must still comply with the terms of the their contracts. If builders experience delays on site as a result of COVID-19 and wish to claim an extension of time, they must provide written notice to the owner in accordance with the terms of the contract.

Where delays are encountered over an extended period or the full extent of the delay is unknown, there may be a requirement to provide multiple notices.

As builders begin to experience delays on site, which by now seems inevitable, builders should be diligent in sending out extension of time notices to avoid the liability of liquidated or general damages arising. Of course, keeping your clients informed also fosters good client relations.

In addition, it would be prudent for Builders to consider including a special condition in all new contracts being entered into from now to deal specifically with the effects of COVID-19 on the contract.

If you would like assistance with your extension of time claims, or drafting a COVID-19 special condition, contact David Ulbrick, Kate Morrow, Lynn Wolfe or any other member of the Construction and Infrastructure Team.

This article was written by David Ulbrick, Partner and Lynn Wolfe, Solicitor.

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