Force Majeure, COVID 19 and Construction Contracts

COVID-19 is disruptive of global supply chains in ways that are well known and strongly felt across the economy. Construction supply chains are no exception, particularly where the materials used in construction works are manufactured in China.

A construction contractor wishing to avoid .liquidated damages liability for the effects of this global supply shock on their work schedules have only their own contracts to rely on.

Unlike non-common law jurisdictions (including China, Europe and the Middle East), an Australian construction contractor does not have automatic legal protections against the disruptive consequences of Force Majeure events such as global pandemics. Nor can an Australian construction contractor take the benefit of upstream or downstream contract protections, because, by the doctrine of privity of contract, if you are not a party to the contract, its terms do not apply to you, even if you are affected by them.

Australian law’s focus on contracts as the source of most legal rights and obligations as between construction contractors and their principals places Australian owners and developers of land in a relatively strong position to manage their own exposure to the consequences of disruptive events like the spread of COVID-19. In the end, it comes down to how they word their contracts and minor variations in wording can substantially affect risk allocation.

For example, in describing circumstances that would entitle a construction contractor to claim an extension of time and delay damages, the use of terms like “Force Majeure”, “circumstances beyond the parties’ control” and “pandemic”, which superficially have the same meaning, may in practice, allocate the risk of delay in very different ways.

ABOUT THE SPEAKER

Daniel Morris
HHG Legal Group, Special Counsel

Admitted to practice law in 2003, Daniel has advised and litigated in a variety of practice areas, including construction, Commonwealth crime, corporate and commercial disputes, personal property security law, planning and development, property disputes, vocational regulation and equity and trusts.

Daniel is experienced in all aspects of litigation and dispute resolution, including trial and appellate advocacy in all WA courts. Since 2007, Daniel has developed particular expertise in construction law. 

Daniel graduated from the University of Melbourne’s Construction Law Masters course in 2013, was awarded the Society of Construction Law’s Brooking Prize in 2014, received a high commendation in the 2019 Brooking Prize competition and has been widely published in the area, including in the prestigious Australian Law Journal and the International Construction Law Review.

Before joining HHG Legal Group in 2013, Daniel was an Associate at a commercial law firm in Perth after about three years pracitsing as a Commonwealth prosecutor.

Daniel has lectured in law at several universities and regularly presents to various professional and industry audiences, including the WA Building Commission, Legalwise, the Civil Contractors’ Federation, the Society of Construction Law, the Chartered Institute of Building, the Australian Institute of Architects and the Resolution Institute.