The current COVID-19 pandemic has, and will continue to have, global repercussions. In the construction space, consideration of how the pandemic will affect force majeure and extension of time (EOT) clauses will be vital to principals, head contractors and subcontractors moving forward.

1. Construction in Focus
19 March 2019
Likely effects of COVID-19 on force majeure and EOT contract clauses
The current COVID-19 pandemic has, and will continue
to have, global repercussions. In the construction space,
consideration of how the pandemic will affect force
majeure and extension of time (EOT) clauses will be vital
to principals, head contractors and subcontractors
moving forward.
It is important to remember that each contract will be
different, so careful consideration of the terms of each
contract and how they will apply in relation to the
COVID-19 pandemic is imperative before taking action
under any of your contracts. Most common force
majeure clauses will allow a party to suspend the
performance of contractual obligations under the
contract if any obligations are adversely affected by a
force majeure event. This poses two important
questions:
1. Is the COVID-19 pandemic a force majeure event
under the contract in question?
2. Is the COVID-19 pandemic adversely affecting one
of your obligations under the contract in question?
1. Is the COVID-19 pandemic a force
majeure event under the contract in
question?
If the contract contains force majeure provisions (not all
of them do), ‘force majeure event’ will usually be
specifically defined in the contract. Many common force
majeure definitions will include epidemic illness as a
force majeure event, but not all are alike. Some will have
additional requirements for the circumstances in which
epidemic illness will amount to a force majeure event
(e.g. declaration of a state of emergency) and some will
exclude illness altogether. For every contract, you will
need to carefully consider whether the COVID-19
pandemic falls under that contract’s definition.
For example, a contract entered into in 2017 could say
that a force majeure event means (among other things)
the occurrence after the Date of Contract of a
quarantine, provided the event or circumstance occurs
within Australia and is beyond the reasonable control of
the affected party.
Would the COVID-19 pandemic fall under that definition
of force majeure event? At this point, no, it wouldn’t.
The COVID-19 pandemic occurred after the Date of
Contract in 2017, it is within Australia, and it is beyond
the reasonable control of the affected party, but as of yet
there has been no quarantine, so no force majeure
event has occurred. If, for example, next week the
Federal Government announces a nationwide 14 day
quarantine, that definition would now be satisfied, and a
force majeure event under that contract would occur.
Remember when the pandemic was announced
For contracts which have been recently entered into, pay
careful attention to whether the definition of force
majeure event can include events occurring before the
Date of Contract or not. The WHO officially declared
COVID-19 a pandemic on 11 March 2020, but the virus
was widely known about since late last year.
We have seen contracts recently which limit force
majeure events to epidemic illness which are not public
knowledge at the date of the contract. For contract terms
like that, for example, it will be highly relevant when the
date of the contract was compared to the knowledge of
COVID-19 at that time.
2. Is the COVID-19 pandemic adversely
affecting one of your obligations under
the contract in question?
Again, this question needs to be considered in light of
the contract terms. What obligation is the party saying is
affected by the force majeure event? For example, let’s
assume a force majeure event under a given
construction contract has occurred, and there is a
contractual obligation to carry out works on the site. If
there is a government-mandated quarantine, that
obligation will be affected because the contractor won’t
be able to send workers to the site to work. However, if
there is no quarantine and no workers have contracted
the virus but the contractor wants to take precautions

2. GOLD COAST CONSTRUCTION, INFRASTRUCTURE AND PROCUREMENT TEAM CONTACTS
Paul Muscat Craig Tanzer Lachlan Bongers Aaron Williams BJ Doyle Tayla Kamura *Disclaimer: the information in this update is
intended as a guide only. Professional advice
should be sought before applying the information to
particular circumstances. MinterEllison does not
accept liability for any errors contained herein.
PARTNER SENIOR ASSOCIATE ASSOCIATE SENIOR PARALEGAL GRADUATE LAW CLERK
T: +61 7 5553 9485 T: +61 7 5553 9481 T: +61 7 5553 9535 T: +61 7 5553 9546 T: +61 7 5553 9544 T: +61 7 5553 9400
paul.muscat@minterellison.com craig.tanzer@minterellison.com lachlan.bongers@minterellison.com aaron.williams@minterellison.com bj.doyle@minterellison.com tayla.kamura@minterellison.com
and not send anyone to the site, they may not be able to
rely on the force majeure event to suspend works.
The bar to reach to show that a contractual obligation is
adversely affected by the force majeure event is usually
quite high, often requiring the party relying on the force
majeure event to show not just inconvenience by the
force majeure event, but that the contractual obligation
actually can’t be performed. This, of course, still
depends on the wording of the contract. This question is
therefore more complicated than it may initially seem.
For example:
• What if one worker contracts COVID-19 but none of
the others have?
• Have those other workers been exposed to the
infected worker or not?
• Is the government guideline for the workers to self-
isolate enough to show that the contractor actually
can’t perform under the contract if there is no
enforceable legislation in place?
• What if the one infected worker is absolutely vital to
carrying out the works because of some specific
knowledge or skill he has?
In each of the above instances, can the contractor rely
on the force majeure event to suspend the contract?
The answers will depend on the construction of the
particular contract in question. At this juncture, where the
issues relating to force majeure for an epidemic illness
are largely untested in Australia in recent history, it will
be best to seek legal advice in relation to any
circumstances which pose these types of complicated
issues.
Careful consideration of contractual obligations is
required in every instance. It is also of significant
importance to keep the interests of public safety front-of-
mind when considering any of these issues.
What does a force majeure event
adversely affecting a party entitle that
party to under the contract?
Many contracts allow suspension of works if a force
majeure event occurs which adversely affects the
obligations of a party. Often this allowable suspension
will in turn lead to an allowable EOT, but the process
and requirements to claim this EOT will differ from
contract to contract.
Contracts will also differ as to how costs of the force
majeure event are dealt with. Some will simply say that
each party bears their own costs of the event, but
sometimes a principal (or head contractor) will be
required to pay a contractor (or subcontractor) for
outlays which occur during a force majeure-caused
suspension as well (for example, when a contractor is
still paying employees or for plant and equipment). Close
consideration of the relevant contract terms should be
undertaken in each instance.
What other considerations are there when
entering into new contracts?
For contracts which are currently being negotiated,
parties should pay special attention to how ‘force
majeure event’ is defined. COVID-19 has already been
identified as a pandemic but may not yet be adversely
affecting your contractual obligations. Remember
though, that if under the force majeure definition only
events which occur after the Date of Contract can be
classified as force majeure events, COVID-19 will likely
not be classified as a force majeure event for contracts
entered into after it was classed as a pandemic by the
WHO on 11 March 2020.
These force majeure definitions, as well as the
substantive force majeure and EOT clauses, will need to
be carefully drafted and negotiated to make sure that the
contract operates as the parties intend.
Overall
All contracts affected by the current COVID-19 outbreak
should be closely scrutinised to determine what rights or
obligations your business has. We encourage contract
administrators to seek legal advice where necessary in
order to ensure you are complying with all your
contractual obligations, and accessing any of your
contractual entitlements.
If you have any questions relating to the above material
and would like further information, please contact Paul
Muscat (details below) for assistance.