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How are Construction Contracts Going to Change After Covid-19?

The pandemic is still a hot topic, especially across the state of Arizona. Numbers are reportedly spiking, but things are still up and running, especially construction projects. 

Construction across the state never really seemed to slow down during the pandemic, as it was always deemed essential. But there have been some adjustments and special restrictions in place and it looks like that will continue for a while, with expected changes to pop up over time as things continue to change. This is especially true for construction contracts. 

Contracts – Time

All contracts need to include a specified date of completion for a project or the number of days it is going to take to complete the project.

Time is a material element in contracts, so if delays pop up, which are not uncommon during these uncertain times, it needs to be addressed immediately.

All of us are being impacted by the pandemic and even though construction projects have not slowed down, they have been taking longer to finish. 

Categorizing Construction Delays

In the contract, delays will be categorized. There are non-excusable delays and excusable delays. Since the pandemic is an excusable delay, we are going to explore that category.

Under an excusable delay, two types fall under the category. They are compensable excusable delays and non-compensable excusable delays. 

A compensable delay allows contractors to receive more time AND more money to finish a project whereas a non-compensable delay awards contractors ONLY more time. 

Written Notice

Some contracts state that written notice needs to be made if there is a delay. In the notice, certain details need to be included like how much extra time is needed and when the new finish date looks like. Just look at the contract and see who to contact when a delay arises. 

Events not under our control, such as a pandemic, are of course going to impact current projects. Most parties are pretty understanding, especially right now. As long as you are upfront and honest about the delay, there should be no issue. You might even want to consider making changes to a current contract to better reflect these tough times. 

Contract Suspension & Termination

There are some projects that may not survive through the pandemic and may need to be suspended or even completely terminated. In most contracts, the owner always has the right to suspend work. When the project is back on, the contractor will be entitled to additional time and compensation. 

However, if the project is suspended for a certain amount of time, the contract can be completely terminated. The details are always in the fine print on every contract. Especially during these times, all parties involved in a construction project need to pay close attention to the details in the contract and even make amendments if needed. 

Working with Murphy Cordier Plc 

Are you involved in your own construction project or have questions about a project that was impacted by the pandemic? Our attorneys are knowledgeable when it comes to Phoenix construction law. Located in the heart of Arizona, our team is a team of skilled and trustworthy attorneys that will assist in all things construction law. We can offer you the legal advice and representation you need, even during a pandemic.