Whether a particular event or set of circumstances will allow an extension of time will depend on the terms of the contract. Again, we will use the SBCC Design & Build Contract 2016 ("the Contract") as an example. The Contract does not specifically include COVID-19 as a Relevant Event as the standard form Contract was prepared prior to the pandemic.
In some circumstances, however, COVID-19 and its consequences may fall within the scope of certain Relevant Events. In particular it could be considered to fall under force majeure.
Whilst force majeure is a Relevant Event in the standard form contract, it does not have any recognised or defined meaning in Scots law. The existence of COVID-19 of itself is unlikely to amount to a force majeure. In the case of Fibula Air Travel Srl v Just-US Air Srl [2020] EWHC 3048 Comm the English High Court determined that the existence of COVID-19, prior to any restrictions laid down by the UK Government, was not sufficient to amount to force majeure. Whilst this was not in relation to a construction contract, it is likely that a similar approach would be applied in interpreting construction contracts.
The shutdowns of building sites and restrictions on working may also fall under another Relevant Event, namely the exercise of powers by the UK or Scottish governments or local authority which directly affected the carrying out of the works.
Both governments have introduced regulations which placed restrictions on various activities and industries. Where this legislation has adversely affected the execution of the works, e.g. by requiring the shutdown of the site or restricting the number of workers allowed on site, this may constitute a Relevant Event. It is important to bear in mind the distinction between legislation passed by parliament and regulations made by ministers which are law, and guidance published by the government, which is not.
You should bear in mind, however, that under the Contract, the existence of a Relevant Event is not of itself sufficient to allow an extension of time. Rather the Relevant Event must also cause delay to the works beyond the completion date to allow an extension of time.
Next week we will consider concurrent causes of delay. If you haven’t read our previous delay blogs, they can be found here.
Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.
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