Contractual terms continue to operate in these unprecedented times

As businesses continue to adjust to how the Coronavirus outbreak impacts works on construction projects, issues could arise that rapidly escalate into disputes between businesses.

Communication is important as the relevant parties focus on practical solutions where problems arise in order to try to work things out in a spirit of mutual goodwill and cooperation. However, parties should always remember that the contract remains in force and should be followed (or amended by agreement) to avoid the possibility of legal problems arising in the future.

Contractual obligations and the procedures that govern the conduct of the parties are not necessarily suspended by this type of external crisis. Contractual notices all need to be issued to ensure they can be relied upon later. For example:

• Giving notice where there is likely to be a delay to the progress of the works and the impact on the completion date and where an extension of time may be sought;
• Issuing payment notices of the amount due and payable;
• Issuing pay less notices where it is intended to pay less than the value of the works;
• Issuing notice of intention to suspend works within 7 days where payment has not been received by the final date for payment.

In the UK, the legal rules are quite strict and therefore limited in scope and effect. There is no general doctrine allowing a court or adjudicator to equitably adjust rights and obligations under a contract in response to external events, however unexpected.

It is as important now as it ever has been to have a full understanding of the contractual rights and obligations under a contract so businesses can take a considered approach to any arrangements that are agreed.

If you have any issues regarding a construction or building project that you would like to discuss please contact Richard Millard, email rmillard@geoffreyleaver.com or call 01908 689382.

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Richard Millard | Managing Partner | Construction and Development