LEGAL ISSUES


Force Majeure And Our Changing World


Among the Big Issues to Be Addressed: Coronavirus, Terrorism and Hacking


By Larry Lubka, Lubka & White LLP


provisions which should be modified to reflect our changing world. Force majeure provisions typically allow for an extension of time (although not increased compensation) for delays which were beyond the control of the owner or contractor, which could not reasonably have been anticipated and which could not be mitigated. Tere are three major issues which


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have arisen in recent years which should be addressed in force majeure clauses: pandemics, terrorism and computer hacking. Keep in mind that force majeure


is generally not an excuse to perfor- mance; it simply provides you with additional time to perform. However, force majeure is a first cousin to the doctrine of “impossibility,” which is very difficult to prove. Tere is case law that indicates that


if you don’t specify what constitutes force majeure in the contract clause, the event impacting you may not be deemed force majeure. If all that is called out in your clause is weather and labor strikes, those may be the only force majeure events that count. Even if you have a catch-all phrase,


such as “all other issues beyond the control of contractor,” you may still be limited in your assertion of false claims. Lord Tenterden’s Rule states “Where general words follow the enumeration of particular classes of persons or things, the general words will be construed as applicable only to persons or things of the same general


www.AGC-CA.org


orce majeure clauses, erroneously referred to from time to time as “acts of god” clauses, are contract


nature or class as those enumerated.” In short, the specific list may overcome the general catch-all. We all know that weather can stop


a project in its tracks. Te question to be answered is who bears the burden and the cost of the delay.


Keep in mind that force majeure is generally not an excuse to performance; it simply provides you with additional time to perform. However, force majeure is a first cousin to the doctrine of “impossibility,” which is very difficult to prove.


Pandemics It is critical that what is “force


majeure” be clearly defined. By example, as of the date of this writing, the CDC had not yet declared the COVID-19 (popularly known as the Coronavirus) to be a pandemic. Te term pandemic itself is very vague. Yet, pandemic or not, the virus has slowed business around the world and will imminently impede deliveries of materials from China and elsewhere. Tere are many “ifs”. If you are the


plumber and the high-grade bathroom fixtures are still on hold since the plant in China that makes the fixtures is closed for three months and shipping is another two months after that, what should you do? If your force majeure


clause does list pandemics as the basis for a schedule extension, or if there is only one source of the fixtures, you may have a force majeure delay claim. If you can buy the fixtures elsewhere at three times the price, you may not have a force majeure event, as you are obliged to mitigate the problem. If the fixtures were not called out in the specifications, you should immediately find an equal fixture for the architect’s or owner’s approval. As with the other two force majeure


topics addressed in this article, the issue is not just impact of a pandemic on the people who catch it. One could argue that the only issue with a pandemic force majeure clause occurs when you can’t find enough workers who are not ill with the pandemic virus. Te bigger issue is the ripple effect of the pandemic. “Ripple effect” may be subject to


interpretive challenges, but one needs to cover the event when the pandemic causes the factory to shut down or the freighter to stay in port. Courts read excuses narrowly, so be broad in your definition. In fact, don’t be afraid to give an example in the force majeure clause (“i.e. delays to manufacturing or shipping delays”). A force majeure clause does not


address sky-rocketing prices. Tis is simply a reminder that a clause which addresses such possible price increases may also be in order.


Continued on page 14 Associated General Contractors of California 13


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