Coronavirus: Impact on works contracts

We are facing the growing and exponential spread of COVID-19 and the Portuguese President has recently declared a state of emergency throughout Portugal. As a result, it is important to assess what impact this situation may have on the ability of parties to meet the obligations they have assumed under contracts in progress.

Indeed, the current situation may lead to tensions between developers and contractors. This is especially so regarding the consequences of any limitations or restrictions on performing the contract that this situation creates, when the parties have opposing views on the measures necessary to mitigate any negative effects or to allocate the risks of the contract.

In this context, stakeholders in the construction sector have raised a number of questions. These include:

• Should (or must) the works be suspended?
• Can the contractor request (or impose) an extension of the period originally established to complete the project?
• Can the contractor request (or impose) a revision of the prices agreed.