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Construction contracts and COVID-19 delays – solutions without statutory intervention?

by Website Administrator

A. Overview 1. While COVID-19 has not closed the Australian building industry, it has caused serious disruption. This is a combination of global conditions (such as travel restrictions and supply chain disruptions) and local regulations (such as keeping 1.5m apart on-site). 2. This has caused delays in many projects. 3. However, COVID-19 (or rather, the delays caused by COVID – 19 ) does not, without more, entitle a contractor under a construction contract to an extension of time.1 That depends on the bargain struck, often reflecting the standard form used, and the events it lists as qualifying delay events 4. Some contracts may not entitle the contractor to claim, but the principal may use their discretion to extend time (called a ‘reserve power’). 5. Although such reserve powers are often said be for the principal’s benefit alone, that is not always so.2 This paper considers if those powers must be exercised to extend time for nonqualifying delays (including COVID-19). 6. I begin with a discussion of some common standard forms and review their receptivity to COVID-19 delays. I then consider, factors that may require a reserve power to be exercised, included potential implied terms,3 and other contractual duties. 7. I then conclude with a short delay case study from the Melbourne Metro Tunnel in Victoria.

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