With the exponential spread of COVID-19, owners, contractors, and design professionals are recognizing the substantial impact this pandemic will have on the construction industry. Several states issued shelter-in-place orders, resulting in the suspension of some construction work.[1] In some states, this has resulted in work stoppages on some of our nation’s largest infrastructure projects. The financial impact of these work stoppages will be significant. As a result, parties to construction agreements have looked to their force majeure clauses for guidance on how these issues should be addressed.
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Managing Project Risk Associated with the Coronavirus Outbreak Through Force Majeure Provisions
Globally, many developers and contractors are scrambling to identify available contractual relief as the Coronavirus (COVID-19) disrupts cross-border supply chains. US businesses will recall a similar effort just eighteen months ago, when the Trump Administration announced increased tariffs on $300 billion of Chinese goods. That trade war prompted companies to scrutinize remedies and mitigate associated project risks by tapping alternative sources originating in other Asian countries and Canada. Once again, construction industry stakeholders should reexamine delay provisions in pending and future contracts to mitigate risks arising from project disruptions caused by COVID-19.
This article provides an overview of US case law interpreting the doctrine of force majeure in the context of disease-related delay claims. Drawing on that guidance, we then identify practical considerations for applying existing force majeure or related delay provisions and how they may be modified for future projects.
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Leah Rochwarg and Wendy Wendrowski to Present at the American Society of Civil Engineer’s Construction Institute Summit
On February 22, 2020, Leah Rochwarg and Wendy Wendrowski will participate as panelists in a program at the American Society of Civil Engineer’s Construction Institute Summit regarding a design professional’s obligation to indemnify its client (to compensate its client for losses sustained because of the design professional’s acts or omissions). While many design contracts include
Mark Johnson to Present Webinar for Lorman Education Services on ConsensusDocs 755 and 756 Master Subcontract Forms on January 28
On January 28, 2020, Seyfarth Partner Mark Johnson will be presenting a Lorman webinar titled “Understanding ConsensusDocs 755 and 756.” ConsensusDocs recently published the new Standard Master Subcontract Agreement Between Constructor and Subcontractor (CD 755) and the Standard Project Work Order (CD 756). Mark will discuss the ConsensusDocs approach and philosophy to its construction forms
On the Effective Use of Liquidating Agreements
Introduction
Congress enacted the Contract Disputes Act of 1978 (CDA)[1] to “provide a fair, balanced, and comprehensive statutory system of legal and administrative remedies in resolving government contract claims.”[2] But for many involved in public construction projects, the CDA does not always feel like a fair or comprehensive scheme for resolving disputes caused by the acts or omissions of the Government. In particular, subcontractors and suppliers are barred by principles of sovereign immunity from suing procuring agencies directly where Government representatives impact, delay, or increase the cost of the work.[3] Because subcontractors and suppliers lack privity with the agency, their recourse for Government interference is limited to “pass-through” or “sponsored” claims, which hinge on the general contractor’s willingness to take up the torch on their behalf.[4]
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Illinois Expands Protections Under the Contractor Prompt Payment Act by Imposing New Restrictions on Retainage
The Illinois Contractor Prompt Payment Act, 815 ILCS 603/1, et seq. (the “Act”) was first enacted in 2007 and designed to safeguard contractors and subcontractors on private projects by providing a mechanism to expedite payments for work performed. The Act applies to all private construction projects in Illinois, except those involving single family residences or multiple family residences with twelve or fewer units in a single building. With the Act, Illinois joined a growing number of states that had enacted similar legislation.
On August 20, 2019, Illinois amended the Act and again joined a growing number of states that are expanding their protections for contractors, this time by restricting the amount of retainage that may be withheld on a construction project. The amendment, codified at 815 ILCS 603/20, imposes a ten percent (10%) cap on the amount of retainage that may be withheld and reduces that cap to five percent (5%) once the project is fifty percent (50%) complete. Specifically, the Act provides:
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Seyfarth Associate Michael Wagner Presented Construction CLE for Lorman
Seyfarth Construction Associate Michael Wagner presented the “Construction Site Data Disclaimers: Who Really Carries the Risk?” webinar for Lorman on August 26, 2019, and an on-demand version of the webinar is available. This program presents the owner and the contractor’s perspectives on the risk of differing or concealed site conditions and the role disclaimers of
Legal Issues to Consider for Projects that Utilize Virtual and Augmented Reality
Developments in virtual reality (VR) and augmented reality (AR) have undoubtedly streamlined traditional design and engineering methods. With VR technology, users are able to fully imagine themselves in a realistic replication of a physical space (think head-mount displays). AR technology supplements what can be imagined in the actual world by adding computer generated images (think Pokémon Go). By utilizing software and devices to map physical space in virtual environments, VR and AR technology allows parties to a construction contract to mitigate the risk of design defects and the inevitable claims and litigation that follow them. VR and AR sectors are predicted to generate $150 billion by 2020.[1]
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David Blake to Present Strafford Webinar on Construction Management Agreements on June 17
On June 17, 2019, from 1:00 to 2:30 p.m. Eastern, David Blake is co-presenting a Strafford webinar entitled: “Construction Management Agreements: Key Provisions Common Areas of Dispute, and Minimizing Performance Risks.” The panel, which includes construction practitioners experienced in negotiating construction management contracts, will focus on best practices for drafting and negotiating these agreements. They
James Newland to Present at Federal Publications Seminar on April 25-26
On April 25 and 26, James Newland, partner in Seyfarth’s Construction Practice Group, will be presenting the “Changes and Claims in Government Construction Contracting” course at the Federal Publications Seminar at the Executive Conference and Training Center in Sterling, Virginia. His presentation will focus on owner changes and contractor claims in the federal government contracting