Is the construction industry on the cusp of a legal storm?

Fears are growing in the construction industry that a surge of liquidated damages claims may arise on the back of projects delayed by Covid restrictions in 2020. To date, this has not eventuated, but Master Builders Association Victoria have proposed a new framework for dispute settlement to head off any widespread legal challenges.

Liquidated damages (in this example) can lead to penalties for a construction company where they have failed to deliver a project (and/or milestone) on time according to their contract. In relation to Covid, it is highly unlikely that a construction contract would contain clauses relating to a pandemic and/or government imposed work restrictions. This is further complicated by legal disagreement about whether force-majeure clauses would encapsulate the circumstances. This is, and should be a concern for government, as any significant legal cases brought against a builder would inevitably lead to a counter-claim by the builder against the government.

Read more from MBAV here and their proposed framework.