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Navigate through the Outbreak

CONTINUOUS BUSINESS OPERATIONS

 

“Bad things happen because of what we did in good times and good things happen because of what we did in bad times.”

Roberto Críspulo Goizueta former chairman, director and CEO, Coca-Cola Company

The COVID 19 Outbreak will run its course and things will get back to normal.  Luckily, as of the writing of this document, Governor Murphy has NOT ordered any changes to construction operations in New Jersey.  Although that could change any day, the availability of materials and labor, as well as alterations to your business, will certainly influence operations related to construction contracts.

Questions and Answers —The below are general questions, which are published to provide guidance.  You should consult with legal counsel about your specific situation:

Q: What do I do if our contract is delayed because of the COVID 19 Outbreak?

A: Look in your contract for force majeure and related clauses.  The purpose of this clause is to limit risk for the parties (both parties).  You should get an extension of time, however the clause will most likely not give the contractor compensation.  Remember, when performing under a contract, the language governs.  Your actions must be guided by your contract.

Q: What do I do if our contract does not include a force majeure clause?

A: Look for a delay clause or the time extension clause.  The current situation certainly qualifies as a “cause beyond the Contractor’s control.”  Obviously you want an amicable resolution to the current situation, however when entering negotiations, it is always best to know where you stand and whether you are in a position of strength.  Your Contract will give you the information.  Start from there and then negotiate for your best result.

In addition, protect your position by meticulously updating your construction schedules. Equipped with a detailed schedule, you
can argue whether the pandemic was reasonably foreseeable, and whether it made your company’s performance impossible.  These arguments are easier to make with contemporaneous documentation.  More about contemporaneous documentation in the next Q&A.

Q: What do I do if I am being delayed by suppliers?

A:  After you look at your contract (Note that the AIA supplemental conditions include “unusual delay in deliveries” as a reason for a potentially compensable delay), it is most important to give notice to all parties.  Contemporaneous correspondence is your best ally.  In other words, correspondence written at the time that an event is happening has an air of credibility.  Moreover, contemporaneous business documents are admissible as evidence in court.  The goal is not to need to worry about what is admissible in court, but the best way to stay out of court is to show the other side that you are well prepared.  This is a great time to talk to your superintendents, project managers and field people about the importance of contemporaneous documentation, particularly when something outside of your control delays your firm’s performance under the contract.

Q: What do I do if the Owner or a higher tier contractor imposes reporting requirements on my company, which were not in our contract?

A: We all have to do our part if we are going to get through this Outbreak, however we must be sensitive to employees’ personal health information.  If another party is requiring you to agree to additional reporting requirements, make sure they are not asking you to identify any individuals by name or provide personal health information such as the individual’s temperature or whether anyone in their family has COVID 19.

Dealing with this COVID 19 Outbreak is a valley that you and your company must traverse in order to get to the next peak.  There are temporary hospitals to be built.  The Federal and the State Governments are expected to provide stimulus projects in the form of construction projects.  Do the right things during these bad times to make good things happen.

 

About the Author:

Steve Berkowitz has been involved in bidding related to public contracts for more than 30 years.  First as an engineer for a fortune 200 company, designing, estimating and bidding projects, and then as an attorney.  His experience advocating for bidders started in the late 1980s and continues today.  Mr. Berkowitz has successfully argued cases in Superior Court, the Appellate Division and the New Jersey Supreme Court.  He has been admitted Pro Hac Vices in Federal courts in New York, New Hampshire, Louisiana, Missouri, Florida, Illinois, Pennsylvania and Massachusetts.

Feel free to call 856-350-6060 or email 

DISCLAIMER

These materials are intended to provide general information about the subject matter and are presented  with the understanding that neither these materials nor the authors have, nor intend to, render any legal or other professional service or opinions. Anyone dealing with a specific legal matter should research any and all matters described generally herein and should not act upon this information without seeking  professional counsel. Do not send us confidential information until you speak with one of our attorneys and get authorization to send that information.