With the world being busy prepping for potential outbreaks of the novel coronavirus (COVID-19) in their own regions, as of today (March 4, 2020), the risk of outbreak remains low with not one confirmed or presumptive case here in Alberta, Canada (yet).
One thing is for certain though, and that is the economic impact is very real and imminent. In an effort to contain the virus, manufacturing activity in China has hit a record low due to factory closures as millions of people remain on lockdown due to quarantine rules and several countries are issuing travel/port/shipping restrictions. This has resulted in massive disruptions in supply chains around the globe.
Here in Alberta, we are not only experiencing delays in shipments from China, but also with CN rail blockades delaying pick-ups and delivery from port.
Since these delays in material shipments are completely out of your control, you may think you couldn’t possibly be held liable for such delays (because common sense). Unfortunately, your contract(s) may state otherwise.
While I’d like to think that all parties would recognize the sheer extremity of this situation waive any claims related to delays, I’m also realistic that its inevitable that some may try to recover costs or damages from lower tier contractors due minor infractions in their administrative obligations.
Please note that the following is NOT legal advice. Just a friendly reminder to remember to always follow your contract.
Taking some time now to review the terms of the contract you have for each project may just save you future headaches in the coming months. Consider the following:
1) Can you meet the schedule with anticipated material delivery delays? If yes, you are good. If not, proceed…
2) Remember that your contract likely also includes many other documents that may contain additional or conflicting information (specifications and higher tier contracts). It is always super important to have copies and review all documents.
3) Refer to the clauses of the contract documents that outline the requirements for the schedule and delays (may also be included in the definitions). Note what is considered as excusable delays or force majeure, but also if there are any notice requirements for any requests for extension.
For instance, the CCDC2 (a standard form of Prime Contract) states the following:
“No extension shall be made for delay unless Notice in Writing of the cause of delay is given to the Consultant not later than 10 Working Days after the commencement of the delay. In the case of a continuing cause of delay only one Notice in Writing shall be necessary.”
While the CCA1 (a standard form of Subcontract) requires notice be submitted within 7 working days.
4) If required, submit Notice to your client in accordance with the “Notice” provisions of your contract. This clause may identify that Notices be sent to a person or address who is not your regular contact for this project and may or may not allow for email.
If no notice requirements are specified, it never hurts to submit one anyways. Your client will appreciate it, as they may have notice provisions required of their client that they inadvertently didn’t flow down to you.
In a perfect world, I always advise a thorough review these terms prior to acceptance of contract, so that these risks can be identified, and negotiated if needed prior to acceptance, but in any event, good contract administration and prompt notices will always secure your entitlement to extensions and lower your risk of claims.
As always, please feel free to call or email if you have any questions or need any assistance with your contract administration, or to refer you to a stellar lawyer who may be able to help where I can’t.