Nuts & Bolts | Construction Law Blog

Force majeure law in the context of pandemics and epidemics is largely uncharted territory. While some sources predict an uptick in disputes, claims, and litigation because of the novel coronavirus and its reverberating effects (which could, unfortunately, be felt for some time), it is hard to know now exactly how a court or arbitrator would decide the issue of responsibility for project delays or disruption due to labor shortages, unavailability of or delay in obtaining materials, or the significant increase in cost of materials, caused by or resulting from a spreading virus. In many cases, the unavailability, delay, or increased expense may be out of the contractor’s control. For example, local governments, health organizations, and employers are recommending, and in some cases, mandating restrictions on traveling or assembling in groups, and quarantines.

The United States’ recent imposition of a 25 percent tariff on imported steel has been problematic for contractors and subcontractors alike. The increased cost of steel means increased costs on projects, and in many occasions, on projects for which parties have already entered into contracts. In fact, benchmark U.S. steel prices have risen almost 40 percent since the beginning of the year, according to an Engineering News-Record report. In these situations, can a contractor or subcontractor find relief from additional costs in the force majeure clause of their contract? While Missouri courts have not addressed the relationship between increases caused by tariffs and force majeure clauses, extra-jurisdictional courts have offered some guidance on how tariffs could be treated under such a clause.