Force Majeure Clauses in Construction Contracts

Please contact the author of this disclaimer, Steven Nudelman snudelman@greenbaumlaw.com | 732.476.2428, to support your construction contracts, including preparation, negotiation or review, or for an analysis of the impact of COVID-19 as a possible force majeure event on a construction project. Mr. Nudelman is a member of the firm`s Construction practice group. Notification is a prerequisite for the declaration of force majeure. In general, the clause itself includes how to inform the other party of the triggered event. If the notification is made correctly, the protection against force majeure begins. Keep in mind that incorrect notification may result in the non-triggering of the force majeure clause and the liability of the manufacturer party in the end, even if the party would not otherwise be liable. When formally issuing a warning or formulating a basis to mitigate the effects of COVID-19, entrepreneurs should try to cite contractual terms or legal theories, but also be careful not to categorize too quickly and potentially cut themselves off from being exempted by other clauses and theories. Owners should also exercise mutual caution and caution when responding. Simply put, in the context of a construction contract, a force majeure event is an event that was not reasonably foreseeable and prevents a contractor from fulfilling its obligations under the contract.

Such events are dealt with in a clause commonly referred to as force majeure. It is a negotiated contractual provision that allows a party to delay, suspend or terminate the performance of the contract if certain circumstances beyond the control of the party occur, making the performance of the contract unenforceable, impossible or even illegal. By negotiating these «certain circumstances»,»the parties can anticipate in advance when the performance of contractual obligations will be excused. A party shall not attempt to establish an exhaustive list of possible cases of force majeure when drafting a construction contract. Instead, a contract should include some of the most likely events and circumstances as examples. These examples should always be accompanied by a catch-all provision to include any other event or circumstance that is not under the reasonable control of the parties. In addition, the catch-all provision should clarify that it should cover both similar and different events from the events already listed as examples. Force majeure clauses should also provide that the parties must be informed when a potential case of force majeure occurs and, as far as possible, how long a breach of contract will be excused. [1] See jones Walker`s March 2020 Customer Alert on Sheltering Orders on Site for details, available at: sites-communications.joneswalker.com/20/1389/landing-pages/impact-of-state-and-local—stay-at-home—or—shelter-in-place—orders-on-construction-in-al—fl—ga—la—ms—and-tx—lp-(fwd).asp?sid=blankform. Privileges are a major concern of project owners in most construction projects.

While many construction contracts require lien waivers from contractors and subcontractors upon payment, many do not specify how lien claims are handled when such claims arise. Project owners should consider additional safeguards in the event that a contractor, subcontractor or equipment supplier makes a lien claim. For example, the owner may request language that requires the contractor to immediately take all necessary steps to satisfy and/or deny a claim for lien, or file money or securities with the court in exchange for that claim. The contract may also stipulate that the owner has the right to take such measures if the contractor does not do so within a certain period of time. The Owner may also require the Contractor to indemnify and hold it harmless from all claims and/or other proceedings relating to the Lien Claim and all related costs and expenses if the Contractor fails to take such action after notification to the Owner. The detailed presentation of the rights and obligations of the parties in the event of a claim of privilege will help clarify whether such a claim is filed at a later date. A force majeure clause («force majeure») is a contractual provision that exempts one or more parties from having to perform their obligations under the contract if unexpected events occur that are beyond the control of the parties and make performance impossible or impracticable. Examples of force majeure events that could prevent the party from having to perform them are «force majeure» (e.B. Floods, earthquakes and hurricanes), war, terrorism and strikes. Indeed, force majeure clauses divide the risk between the parties when an unexpected and uncontrollable event occurs that prevents a party from performing. Force majeure clauses, whether in manufacturing contracts or other types of contracts, are intended to deal with events that were not reasonably foreseeable. Such clauses generally allow a party to postpone or terminate performance if events occur beyond the control of either party, resulting in the performance of the contract as impracticable or impossible.

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