COVID lockdowns have affected many people and businesses worldwide, and the impact on the construction industry has not been immune. Contractors impacted by COVID-related restrictions have sought to find remedies for loss of income and profits and have sought extensions of time as a means to minimise the negative impacts on their balance sheets.

We have received enquires based on the assumption that COVID-related lockdowns automatically trigger a delay in construction projects but is this the case?

The short answer is no. COVID lockdowns do not automatically give rise to a delay on typical UK construction contracts. The contractor must:

1. Categorise the event:  Has the “pandemic” event class been directly and expressly referenced in the contract? Has there been a distinction between “pandemics” and “epidemics” or other similar variants?
2. Document and mitigation the event’s impact:  Records demonstrating clearly that specific activities or supply-chains have been affected by the COVID preventing the contractor from performing his contractual duties. The contractor has a duty to mitigate delays. Therefore, the evidence is needed to demonstrate that he has taken all steps to avoid or minimise non-performance that occurred due to the outbreak.

We have examined to what extent some prominent standard forms of contract deal with COVID-related delays.

FIDIC Red Book (1999):

• Clause 8.4 Extension of Time for Completion

(d) Unforeseeable shortages in the availability of personnel or Goods caused by an epidemic or governmental actions, or

FIDIC Red Book (2017)

• Clause 18.1 Exceptional Events (ii) the Party could not reasonably have provided against before entering into the Contract;
• Clause 18.4 Consequences of an Exceptional Event

The JCT Standard Forms of Building Contract

• It contains an EOT provision by reference to “relevant events”. The JCT standard forms, however, does not have a definition of force majeure. Therefore, it is necessary to consider the common law position as it pertains to frustration should force majeure is not defined in the contract^[1].

NEC3 and NEC4 Standard Forms

• Clause 60.1(19)
• A compensation event if an event stops the contractor completing the works or stops the contractor completing the works by the date shown on the accepted programme, and which neither party could prevent, an experienced contractor would have judged at the contract date to have such a small chance of occurring that it would have been unreasonable for them to have allowed for it and is not one of the other compensation events stated in this contract and is not an additional employer’s risks stated in the contract data^[1].

Suggestions on how to avoid a lack of clarity in future contracts: 

• Include specific clauses regarding pandemic or unforeseen virus outbreaks and government lockdowns in Force Majeure or unforeseen events.
• Put in place pandemic plans, particularly for mandated or recommended lockdowns.
• Legal advice should be sought in cases where other party resists incorporate pandemic clause.

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