Due to COVID-19, my Contractors tendered supply chain for a trade has closed with no sight of when they will re-open. They have found another supplier to try and avoid any more programme delay however the price is more.
Is this a valid CE in an Option A contract or am I right in saying the Contractor takes all the risks associated with their sub-contractors?
They may be able to argue that Compensation Event 60.1(19) applies as an event that stops the Contractor from working and which neither party could prevent.
It is widely acknowledged that COVID-19 is a compensation event in NEC contracts under clause 60.1(19) which is a force majeure style event. This entitles the Contractor to cost and time that flows from the event so provided they can justify that it is linked to COVID-19 then it can be recovered.
If the contract was entered into very recently e.g. over the last few weeks then the Contractor’s argument may not be as strong as it becomes harder to say “an experienced contractor would have judged at the Contract Date to have such small chance of occurring that it would have been unreasonable for him to have allowed for it” which are the words used in clause 60.1(19).
Much will turn on the specific facts and circumstances surrounding the project to determine what entitlements the Parties have.
Apologies as this is going to be a bit controversial but I would be grateful to see the general response.
Surely if the supply chain has closed due to staff being furloughed then this is a commercial decision and not an instruction under the Covid-19 legislation, No company has been instructed or directed by any change in legislation to furlough staff therefore it is a Contractor risk which he has to resolve? This is not a CE although any resulting approach that changes the WI would be, but not necessarily applicable for additional time/cost?
Also, as social distancing in England is guidance only and not an instruction under the enforcing legislation any measures brought in on site which add contractor cost to supervise or carry out, and any time delay, are not due to the change in legislation and therefore also not a CE, again unless a change to WI is instructed. I believe that the status of the CLC guidelines is unclear as to their legal position? It is advise only?
Contractors have to protect their workforce under the H&S at Wok act but unless the Works Information specified particular welfare/safety requirements that are now unsafe and therefore require an Instruction to change, this is a site management issue.
I would looking forward to being corrected on this but there is a lot of confusing information out there, with differing legal interpretations and I expect there to be a considerable amount of adjudication to come to be able to understand the exact position but would welcome feedback.