As we emerge from the treacherous labyrinth of this pandemic, the resultant aftershocks are juddering through the fabric of our legal landscape, particularly on the terrain of contract law. Like the COVID-19 virus, COVID-related contract claims have not gone away, manifesting in myriad ways that continue to test the boundaries of law.
One such frontier is the realm of contracts struck in the middle of this global health crisis. One noteworthy case that has achieved prominence is Pernix Serka Joint Venture v. Department of State, CBCA No. 5683, 20-1 BCA ¶ 37589 (April 22, 2020). The Civilian Board of Contract Appeals (CBCA), in this particular litigation, ruled that the additional costs incurred by a contractor due to the Ebola outbreak did not result in entitlement to an equitable adjustment.
This scenario showcases the grey areas of contractual obligations in the wake of unprecedented circumstances like a pandemic. Companies and legal professionals globally have been grappling with recovering costs associated with such disturbances.
There are numerous dimensions to this complex quandary. Here, we venture into the heart of this legal quagmire, seeking to delineate the principle challenges and possible solutions:
- Contractual Terms: As with any dispute, the terms of the contract sit at the heart of the matter. Specifically, the contract’s contingency clauses and force majeure provisions become the focal point. If these are not specific enough to include a situation like a pandemic, the path to recovery becomes challenging.
- Government Intervention: In some cases, government intervention may play a role in upending what would otherwise be regular contractual processes. These could take the form of lockdown restrictions, social-distancing rules or any other regulations imposed during the pandemic.
- Legal Precedence: The lack of legal precedent for such unusual circumstances makes it even more challenging. Previous interpretations and judgments are oftentimes the guiding light in new disputes but in such cases, they are few and far between.
- Contractual Parties: Understanding the position of each contracting party can also throw light on the approach to resolution. It’s essential to establish whether both parties could or could not have foreseen the scale and impact of the health crisis when agreeing to the contract.
As the world continues to grapple with the consequences of the COVID-19 pandemic, it’s crucial that legal professionals tread cautiously while navigating these uncertain waters, equipped with the lessons of past experience but ready to establish new jurisprudence whenever necessary.