Litigation-I Win, You Lose vs. Mediation-Win/Win

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  Litigation is a zero-sum game.  It destroys relationships and fosters enmity between the parties.  Parties rarely walk away happy.  Even if they win, the expense of litigation is enormous, and collecting on judgments is difficult. Disputes ultimately resolve, but the focus on winning at any cost can lead to prolonged legal battles.  Living with a lawsuit causes ongoing stress, which can distract you from your business and even have an effect on your health. In a courtroom, the final decision lies with a judge or jury who may not fully grasp the complexities of the case. Parties relinquish control over the outcome, potentially leaving them dissatisfied with the final judgment. Mediation has the opposite effect.   Rather than polarizing people, it enables the parties to attack the issues and not each other.     The process promotes open communication, collaboration and problem-solving, which enables parties to actively participate in crafting ...

Coronavirus and Construction-Clauses for Your Contracts

Photo by Ben Garratt on Unsplash


On Friday, April 17, the City published a draft COVID-19 Safety Policy for Construction.  These are new requirements designed to make job sites safer for workers and communities that are expected to be implemented by Monday, April 27. 

The requirements offer guidelines for performing construction work for the “new” normal.  Essential work in Boston includes “small residential construction projects in dwellings of 3 units or less (for example, kitchen or bathroom remodeling)” which means that you may be returning to work.

In addition to following the protocols, how can you, as a company, protect yourself legally as new COVID-related issues arise?  One way is by including an addendum to current contracts and adding clauses in new contracts that anticipate possible scenarios and how they should be addressed.

State the following:    This is an Addendum to the existing Construction Agreement dated XX/XX/XXXX.  It is incorporated herein.  Then I would have everyone initial it.

To work or not to work?  Since this crisis began, contractors have had to face the question of whether to continue working.  Some wanted to shut down to protect their workers, and others wanted to keep working to keep business on track.  In either scenario, there are liability concerns. 

Force Majeure

Does your contract contain a provision that would allow you to stop working in the event of a pandemic?  It might.

Some of you have one already, but it can be expanded.  If you have ever wondered what “force majeure” means, it refers to natural disasters or Acts of God.   I would add the following:

Contractor reserves the right to suspend or cancel projects in the event of a pandemic, natural disaster, government orders or other force majeure events in order to protect the health and safety of its workers and customers.  Contractor will make every effort to resume its projects once, in Contractor’s discretion, it has been deemed safe to undertake its regular business operations.

If you prefer, you can also give your customers the same right to suspend or cancel.

Delay

Many of you have “no damages for delay” in your contracts.  If you don’t, you should.  In addition, we can now spell out that a pandemic is one of the circumstances that would prevent damages for delay: 

In no event will Builder be liable to Owners or any other party for any special, incidental, delay, emotional distress or consequential damages arising from this Contract.  Builder shall not be liable to Owners for any damages resulting from coronavirus or other force majeure policies enacted by Builder that cause delays in current projects or in the commencement of new projects.

Social Distancing

What if you want to keep working?  If you are in an unoccupied building, the Owner should not be allowed to come on site without notifying the contractor so appropriate social distancing measures can be taken.

Owner agrees that he will not enter the Work Area while the work is being performed without the permission of Contractor.  Owner shall not enter the designated work area without express authorization from, or without being escorted by, Contractor or Contractor’s representative. If Owner encroaches upon the worksite, he will sign an acknowledgment that he entered the work area without Contractor consent.  It is the responsibility of the Owner to prevent household members, other workers, children, visitors, pets, and others from entering the work containment area, especially after hours when Contractor is not present at job site.

Indemnification

If you are working in an occupied structure, liability issues are even more concerning.  What if the Owner accuses you of exposing him to the virus?  Alternatively, what if one of your workers gets sick from exposure to the Owners or their family?

I have been told that home insurance policies do not provide coverage for pandemics.  So, you may agree to sign reciprocal “hold harmless” provisions that state that no one is liable for transmission of the virus:

To the fullest extent permitted by law, the Owner shall indemnify and hold harmless the Builder, its agents, subcontractors and employees, from and against any and all claims, damages, losses and expenses including but not limited to attorneys’ fees, by Owner, Owner’s household members or Owner’s representatives, arising out of or resulting from exposure to COVID-19 or any other communicable illness. This indemnification obligation shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Owner under any insurance policies held by Owner. 

To the fullest extent permitted by law, the Builder shall indemnify and hold harmless the Owner, Owners’ representative, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, from and against any and all claims, damages, losses and expenses, including but not limited to attorneys’ fees, by the Builder, its agents, subcontractors and employees, arising out of or resulting from exposure to COVID-19 or any other communicable illness. This indemnification obligation shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Builder under workers’ compensation acts, disability benefit acts or other employee benefit acts.

Or, more simply, each party can waive his/her right to sue the other: "The parties waive all claims for transmission of COVID-19 against each other."

Check with your worker’s compensation insurance about coverage if a worker or subcontractor claims the disease is contracted during work.  Also check your liability coverage for pandemic-related issues.  Find out if business interruption insurance will cover coronavirus interference with projects.

Subcontractor Contracts

Builders will want reciprocal indemnification clauses with their subcontractors as well.  No one wants to be held liable for transmission of the disease.

Indemnification

To the fullest extent permitted by law, the Subcontractor shall indemnify and hold harmless the Builder, its agents, subcontractors and employees, from and against any and all claims, damages, losses and expenses including but not limited to attorneys’ fees, by Subcontractor, Subcontractor’s representatives or employees, arising out of or resulting from exposure to COVID-19 or any other communicable illness. This indemnification obligation shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Subcontractor under any insurance policies held by Subcontractor. 

To the fullest extent permitted by law, the Builder shall indemnify and hold harmless the Subcontractor, Subcontractors’ representatives, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, from and against any and all claims, damages, losses and expenses, including but not limited to attorneys’ fees, by the Builder, its agents and employees, arising out of or resulting from exposure to COVID-19 or any other communicable illness. This indemnification obligation shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Builder under any insurance policies held by Builder. 

What about new safety policies required due to COVID-19?

Safety

Subcontractor agrees to be responsible for maintaining all COVID-19 related safety practices on the jobsite and, specifically, for his/her trade in compliance with any applicable building code or other regulations.  Subcontractor warrants and represents that he is familiar with and will comply with all state and city COVID-19 regulations.

Please let me know if you have any additional ideas, questions or concerns.


Sincerely,


Andrea







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