Construction contracts contain time pledges stating the time period by which a site should be completed by. Since the outbreak of the COVID-19 pandemic and in particular the government’s announcement on 23 March 2020, contractors are understandably concerned about the ability to meet the time pledge in contracts. This is due to various factors such as, workers self-isolating and the closure of various businesses due to measure put in place to fight the virus which means that the supply chain is disrupted.
If the time pledge is not going to be met, a breach of contract will occur. Therefore, contractors may be liable to pay liquidated damages for the delay or face claims for damages for the delay.
However, subject to what the contract states, the contractor may be able to apply for an extension of time or even step away from their obligations in certain (although limited) circumstances.
In these unprecedented circumstances, parties should endeavour to agree an extension of time in good faith. Advice should be sought be entering into an agreement to extend.
The government is introducing new legislation almost on a daily basis in the fight to contain the spread of COVID-19. Therefore, advice should also always be sought before a party takes step in fear a time pledge will not be met.