LEGAL MATTERS
Contracts in the Age of COVID-19: Some Suggestions to Protect Your Business.
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OVID-19 has caused flooring retailers and contractors to face delays due to government-imposed stay-at-home orders, supply chain disruptions, cost increases, and the lack of installers. With the anticipated surge in COVID-19 cases over the next several months, flooring retailers and contractors may again face delays and costs like those experienced last spring. Accordingly, retailers and contractors should consider taking some precautions to deal with these issues.
Contract Review Jeffrey W. King Legal Counsel for the WFCA Jeffrey King has more than 35 years’ experience in complex litigation with a focus on contracts, employment, construction, antitrust, intellectual property and health care. He serves as legal counsel for WFCA and other trade associations, and is a LEED Accredited Professional. For more information, contact him at (561) 278-0035 or jeffw@jkingesq.com.
The first step is to review your contracts. It is important to understand your contractual rights and make appropriate modifications to minimize potential problems and costs. Whether a retailer or contractor can avoid liability for delays and increased costs from the COVID-19 pandemic will depend on the language in the relevant contracts. While each situation is different, some of the key construction contract clauses to consider are discussed below. 1. Force Majeure and Delay Clauses Force majeure is an unforeseeable circumstance that prevents someone from fulfilling a contractual obligation. A force majeure clause can excuse a delay and may allow the retailer or contractor to terminate the agreement as a result of an unforeseen event specified in the force majeure clause. The right to terminate could allow them leverage to renegotiate the agreement to cover increased costs. Most contracts include a force majeure or a delay clause, but the language of what is covered can vary. The issue of whether the COVID-19 pandemic is covered is likely to depend on whether the clause covers “epidemics,” “government action,” or “acts of God.” In the commercial market, for example, one of the most commonly used series of construction contracts is the AIA 2017 “A Series” Owner/Contractor agreements. The AIA contract does not include a force majeure clause but does address “Delays and Extension of Time.” (AIA Contract at § 8.3.1). The AIA contract provides for an extension of the contract time for excusable delay as a result of “labor disputes, fire, unusual delay in deliveries, … adverse weather conditions,” etc. The AIA contract, however, does not include epidemics, government action, or acts of God as justifying any delay. On the other hand, the ConsensusDocs, and EJCDC forms, also commonly used in the commercial market, include force majeure concepts in the
The first step is to review your contracts. It is important to understand your contractual rights and make appropriate modifications to minimize potential problems and costs. 52 Premier Flooring Retailer | Digital 3 2020
