Construction projects are particularly vulnerable to unforeseen events that can disrupt schedules, increase costs, and affect project performance. From natural disasters and pandemics to geopolitical conflicts and supply chain disruptions, external events can significantly impact a contractor's ability to fulfill contractual obligations. To address such risks, construction contracts often include a force majeure clause.

The COVID-19 pandemic brought unprecedented attention to force majeure clauses across the construction sector. Project delays resulting from lockdowns, workforce shortages, material scarcity, and transportation restrictions led to numerous disputes.

Many parties have since revised standard construction contracts to address future pandemic-related disruptions more explicitly. A well-drafted force majeure provision can provide parties with relief when extraordinary circumstances beyond their control prevent or delay performance. However, disputes frequently arise regarding the scope, applicability, and consequences of such clauses. Understanding the legal and practical implications of force majeure is essential for subcontractors.

Courts generally interpret force majeure clauses narrowly and in accordance with their express wording.

When assessing a force majeure claim, courts commonly examine: whether the event falls within the contractual definition; whether the event was beyond the party's control; whether performance was actually prevented or merely rendered more expensive; whether the affected party complied with contractual notice requirements; and whether reasonable mitigation measures were undertaken.

The scope of protection depends entirely on the wording of the contract.

What you as the subcontractor want to look out for in the Force Majeure clause

Construction contracts commonly identify specific force majeure events, including: natural disasters, governmental actions, public health emergencies, and civil and political disturbances. Though any of the reasons listed above can cause supply chain disruptions, supply chain disruptions are often not listed as specific force majeure events in contracts. You will want to make sure that the force majeure clause contains a list of specified events with a general catch-all provision.

Many construction contracts will require you to provide prompt written notice to the general contractor or higher tier contractor upon becoming aware of a force majeure event. You will want to pay attention to any contractual notice period deadlines as your failure to comply with such notice requirements may result in the loss of contractual relief, even where a qualifying event exists.

A critical issue is whether force majeure entitles a party to recover additional costs. Most contracts permit only schedule relief whenever a force majeure event occurs; however, we recommend that you negotiate compensation for: increased labor costs; material price escalation; equipment standby costs; and additional site overhead expenses.

What do you do if the force majeure event lasts for an extended period of time? Are you still bound by the contract, or can you terminate the contract? If you are able to terminate the contract, are you still liable for any damages due to the termination? What are the notice requirements for termination of the contract due to an extended force majeure event? These are important questions that you need the answer to and things that you will want to have memorialized in the contract before you sign it.

Parties are generally expected to take reasonable steps to minimize the impact of the force majeure event. You may be required to: seek alternative suppliers; adjust construction sequencing; implement contingency plans; or utilize available resources to reduce delays. You will need to have it defined in the contract if you will need the general contractor’s cooperation with mitigation and what your liabilities are if the general contractor fails and/or refuses to assist with your mitigation efforts.

Conclusion

Force majeure clauses serve as a critical risk allocation tool in construction contracts. As projects become increasingly complex and exposed to global risks, careful drafting and proactive contract management are essential. It is important that force majeure provisions adequately reflect the realities of modern construction projects and provide a clear framework for addressing unforeseen disruptions.

By understanding the legal requirements and practical implications of force majeure, you can better manage risk, preserve contractual relationships, and minimize the likelihood of costly disputes when unexpected events arise.