Contracts in the Age of COVID-19
Associations across the country continue to try to operate as best they can during the COVID-19 pandemic. Stay-at-home orders, social distancing requirements, and the closure of non-essential business are having an enormous impact on the day-today operations of associations and may have a significant impact on existing and future association contracts.
Association’s existing contracts may be impacted by COVID-19. Some contracts include a “force majeure” clause that may excuse performance due to COVID-19 restrictions. Even if a force majeure clause doesn’t apply, common law defenses may excuse performance. Potential issues may include increased difficulty and cost of performing the work, a complete inability to perform the work, or even vendors going out of business. COVID-19 may also prevent associations from fulfilling their obligations to provide access or necessary support.
It may be in the association’s best interest to explore modifications to existing contracts to address the impacts of COVID-19. However, any proposed contractual modification should be undertaken by an association, only after fully understanding its contractual rights and obligations. Associations should work with their counsel and vendors now to address these issues before they turn into a serious conflict.
As associations consider entering into any new contracts, they should consult with counsel about adding language to address the impact of COVID-19. For example, new construction contracts should include language stating that the contract amount and duration already reflects existing COVID-19 related restrictions. In the absence of that language, the contractor may demand a change order for more time or money to complete the project due to impacts from COVID-19.
New contracts should also specifically require compliance with government regulations, including social distancing and personal protective equipment. To the extent your association has additional requirements or restrictions those should be referenced as well.
For both existing and new contracts, like most things COVID-19 related, an ounce of prevention is worth a pound of cure.