The Construction Leadership Council (CLC) anticipates that there may be more COVID-19 related contractual disputes in the construction sector this year.
At the start of the pandemic in March 2020, parties were reportedly more willing to tolerate breaches of contract and resolve disputes amicably due to a mutual understanding of the effects that COVID has had on businesses and their ability to complete projects and meet deadlines.
However, the CLC considers that attitudes have since hardened, due to the fact that most firms are expected to have adapted their working practices to mitigate the economic effects of the pandemic. It anticipates that, while firms may be willing to agree an extension of time for completion, there is a reluctance to agree financial losses, costs and expenses.
The CLC has advised firms to try to resolve disputes constructively amongst themselves without the need for an adjudicator and that, if an adjudicator is necessary, it is vital that firms keep good contemporaneous records relating to the impact of COVID on productivity and costs and what steps they have taken to reduce this impact.
Whilst the CLC's predictions are particularly relevant to the construction sector, they apply to all types of commercial contracts, transactions and disputes. The working practices of the vast majority, if not all, businesses across the UK have been affected by COVID-19, with the restrictions on travel, the "stay at home" message and reduced staff levels due to Furlough leave and redundancies. Therefore, the ability of all kinds of businesses to provide services may be compromised.
In light of this, it is important for businesses to be aware of their rights and obligations under commercial contracts, both at the time of entering into the contract and in the event of a possible breach. It is therefore prudent to seek legal advice at the earliest possible opportunity.
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*This article is provided for general information purposes only and does not constitute legal advice or other professional advice.