Construction contracts after COVID-19

Connecting New Zealand

Construction contracts after COVID-19

28 Oct 2020

CCNZ has received quite a few enquiries about how pandemics and the risk of lockdown is managed in contracts signed since February 2020, especially in relation to contractor entitlements in the event of return to a COVID Level 4 lockdown or the incidence of another pandemic type event.

Contractors should be aware that contracts signed since February 2020 are likely to be interpreted differently than those signed before that time. In particular, clause 10.3.1(f) (of a standard NZS 3910 contract) in terms of unforeseeable events may not be able to be relied on, as it could be argued that further lockdowns are now foreseeable.

On 18 June 2020, CCNZ and Core Associate member Dentons Kensington Swan ran a webinar on future contracts. The key message was that contracts should now include special conditions to deal specifically with COVID-19 or similar epidemic or pandemic events to protect the contractor’s position around both time and money.

Dentons Kensington Swan provided some examples of special conditions to manage this risk as part of the webinar. A full copy of their presentation and the suggested clauses can be accessed using the left menu in the members section of CCNZ’s website.

The following issues need to be considered
• Costs related to demobilisation, maintaining the site during lock down and remobilisation
• Costs of holding staff, materials and equipment during lock down
• Extensions of time equivalent to lockdown or longer e.g. if key supply chains are disrupted in NZ or overseas, whether critical jobs can’t be completed within a construction season, or key staff cannot be bought into the country
• Any loss of productivity or disruption due to Level 2 or Level 3 restrictions

Dentons Kensington Swan has extensive expertise in all aspects of construction law. Members are entitled to 15 minutes free legal advice from Dentons Kensington Swan under CCNZ’s Core Associate agreement, and their team are on hand to answer any questions and clarify contracts post COVID-19 if required.

If you wish to use this service, please contact CCNZ Membership and Events Manager Eve Cooper with a brief description of your query and we will identify the right person to support you.

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