Performance Bonds - Prepared for the Coronavirus

Force Majeure

This may be a trigger that comes into play for the unexpected delays caused by the Coronavirus - the first time around. But now that we have been told this is a pandemic are we protected for new contracts?

So let’s ponder this for a moment. But not too long if you are still signing contracts. An uncontrollable event usually triggers the execution of a performance bond and with some leeway to acts of government. Performance bonds take into consideration labor, materials and the ability to work. In a recent article written by Surety Bonds, Performance Bonds and the Coronavirus what may be overlooked are the shortages of face masks required for laborers to perform their work. Further in the article, it states that three causations are required to pass legal scrutiny.

• The event was unforeseeable

• The event was unavoidable

• It was impossible to overcome

Well, for newly penned contracts, can a contractor even get past the first criteria if the CDC and WHO have declared otherwise. Also, a pandemic starts somewhere, and in this case China. It may not take a pandemic if the next virus outbreak begins in the U.S. as an epidemic and we take the same course of action again.

Now would be a good time to include specific language about viruses and even a Coronavirus, since (these have been around a long time (check your Clorox cleaner label). Contact your legal counsel and maybe Surety Bonds to see if you would be protected for contracts you are willing to sign after January 2020.