Contractors Should Scrutinize Contracts Carefully Amid COVID-19 Crisis

During the COVID-19 virus crisis, it is important for contractors to protect themselves from possible legal action by adhering to the provisions of current contracts, lawyers advise.

“The virus and its economic impact will almost alter pre-existing plans for owners, developers, general contractors, subcontractors, and everyone else down the chain,” according to Balch & Bingham LLP. “While many are understanding of these circumstances, there are ways to ensure you are protected going forward.” They advise:

• Review on-going contracts and locate their delay, force majeure, change order, termination, suspension and other relevant provisions.
• Comply with time-sensitive notice requirements. This includes supply agreements and insurance policies. When there is uncertainty over whether to invoke a provision in a document, consider putting the other party on notice to protect your rights.
• Scrupulously document developments. “Proving delays, labor shortages, supply interruption, and other project impacts tomorrow will depend on the evidence being created (or not being created) today.” Simple email or daily notes are acceptable to record the impacts from COVID-19.
• Check your insurance coverage. Business interruption insurance typically includes complex provisions and exclusions.
• Anticipate operational problems. “Administrative tasks might be easily completed from home while supply chains may be severely limited by a reduced and quarantined workforce thousands of miles away.” Anticipate likely problems and try to plan for them.

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