March 24, 2021

Pandemic creates widespread contract confusion – research finds

News Article

Latest research has revealed widespread confusion across the construction sector, with clients and construction firms unsure who is liable for contract breaches as a result of the pandemic.

The survey found that the majority thought liability lay with the client. It also found that a third of contractors who responded admitted they were unsure whether their contracts were fit for purpose, given the ongoing issues associated with Covid-19.

Nick Jones, Associate Director with consultants, Turner & Townsend, which conducted the research, said: “The Covid-19 pandemic hit live projects with delays, site closures and reductions in productivity.

“Almost a year on though and we still do not have enough clarity on the liability within construction contracts.

“This needs to be addressed, and quickly, particularly with new projects coming online thick and fast as part of the push for economic recovery.”

“As contractors and clients alike now seek to recover losses incurred during the pandemic, it’s important to seek specialist advice.

“If 2020 has taught us anything, it is that all parties will now want to ensure clarity for Covid-19 event liability through the drafting of expressly worded contract terms, and the contractual ‘employers’ may also be looking to address the current imbalance of risk and responsibility for the future.”

The research also revealed that 45 per cent of respondents had seen a rise in contractual disputes since the start of the pandemic.

Adam Davis, a Director and Head of Palmers Construction Law team, said:  “The research findings raise interesting questions for many contractors, regarding the suitability of their contracts.

“Many of the standard form contracts, including the JCT suite of contracts, will have provisions contained within them that, whilst not perfect, will assist in dealing with issues of delay as a result of Covid-19, such as force majeure clauses.

“In the past 12 months many clients have recognised the challenges that have been faced by contractors and have, in many instances, assisted in providing the required extensions of time.

“However, certainly going forward, I would expect more and more contractors will wish to include specific pandemic/epidemic clauses within their standard form contracts in order to better protect themselves.

“If anything, the current global issues as a result of Covid-19 have highlighted weaknesses within the standard form contracts that can only be addressed via amendments agreed between the parties and, as such, contractors and clients alike should be alive to seeking reasonable amendments to standard form contracts going forward.”

For further information on redrafting contracts or issues relating to construction disputes relating to an alleged breach of contract, please contact us.