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Constructing new farm buildings in light of coronavirus

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Posted by Michael Hiscock on 09 April 2020

Michael Hiscock - Construction Lawyer
Michael Hiscock Partner - Head of Construction

We are facing unprecedented times at the moment. It is very difficult to assess where the current situation will end, but food is a critical resource at the present time and the importance of the British farm community cannot be underestimated. Some farms may have been considering investing in new buildings or other facilities to improve their efficiency and increase output.  Some farms may currently be in the middle of constructing buildings, sheds, stores and animal compounds to maximise their output, but are now faced with a problem of whether to start the job at all or how to complete it in the face of the current pandemic and its impact on the construction industry.

Where farmers have engaged builders to support them in these projects, it is important to consider the legal relationship and the parties’ various entitlements. The first thing to consider is health and safety. All clients, who are procuring construction works of any sort, have legal responsibilities to consider the health and safety implications of their project, appointing principal contractors and principal designers who are competent to deal with the health and safety aspects of a site. While a farmer would not need to check the design itself and the method of construction, farmers, as with all clients procuring works, must ensure that all required information is provided, site welfare facilities are suitable and appropriate (canteens, rest areas, toilets and showers) and the systems and processes implemented are reasonable and proportionate so that the risk to health and safety can be eliminated or minimised, as far as reasonably possible.

Construction sites are inherently dangerous and risks cannot be totally eliminated, but must be considered at the beginning of the job and throughout the entire process.  This is consistent with Construction Leadership Council Site Operating Procedures which have been validated by the Government as following Public Health England guidelines. Construction companies must minimise risk, where possible, but there is some acknowledgement that, as long as they maintain suitable health and safety processes and procedures, construction sites can carry on in some circumstances.  The Site Operating Procedures recommend a 2 metre distance, where possible, but, of course, some construction processes require close working, so builders should be providing site operatives with personal protective equipment, over and above the steel toe cap boots, hi-vis jacket and hard hat, such as gloves, masks, goggles, overalls and also split out tasks sequentially, so that the minimum number of people are on site at any one time, using technology, where appropriate, to reduce human contact.

Moving on to the contract with the builder, if the project is scoped, the builder has quoted a price and a completion process, so that you have certainty of what, when and how much, then there is likely to be a contract in place as a matter of law. An agreement can be created verbally, or in writing, in letters, e-mails, purchase orders, tenders or, in some cases, formal contracts such as the JCT suite.  If the builder has started work, and been paid, then there will be some form of agreement in place. You cannot simply cancel a contract and walk away. English law allows a party to finish the job they are contracted to perform.

The more detailed contracts provide measures dealing with force majeure, changes in national laws and specific grounds for claiming time and money. Check the contractual process. There may be specific notice requirements that the builder must give, specific timelines to follow and limited grounds on which they can claim. It is always better to start by understanding the rights of each party. However, even if the agreement with the builder is oral or by emails, then they still have to comply with health and safety law, they still have to complete the job in a reasonable time, they still have to follow the law relating to payment in construction contracts and they have to build the project in a good and workmanlike manner.

Also don’t overpay. If extra money is requested, consider how that money can be secured. Is a bond or guarantee offered or is it possible to buy materials direct so ownership of goods is not challenged. Perhaps holding money in escrow is an option or advance payment is offset by a price discount or reducing the project scope?

There is a legal concept, in some circumstances, where they can terminate the contract due to the project being impossible to complete, but that is a very high threshold. Given the context of construction sites continuing to operate, it is more likely that they will face problems obtaining supplies and human resources required to finish the job on time.  In those circumstances, they will request a formal extension of time, although everything they do must be reasonable and they must make efforts to minimise the effect where possible. The project does not automatically terminate even in these tricky times. If they ask for more money, ask what steps they have taken to source alternative solutions of an equivalent standard and be cautious about paying on demand. Investigate and clarify the basis of their claims. The concept of “force majeure” is not a standard English legal concept so, although the words may be used, it does depend upon the form of contract.

You may also face problems with design inspection, site monitoring and completion of certification issues, particularly if you are using external consultants to support your project.  Again, there is no specific rule preventing those consultants from coming to visit the site, particularly if they can maintain safe processes with social distancing and other protective equipment. Indeed, in some cases, the builder can move out of the way so that the surveyor or engineer can inspect current progress. In some larger projects, monthly valuations are needed, in which case the surveyor will need to make a judgment on progress and whether the builder has achieved key milestones which entitle them to further payment. While a lot can be done on the computer, there is a point at which site visits are required so, again, please talk to the consultants about how they can achieve this. The builder may need extra time so that there is an inspection day when the builder is not working but the surveyors are reviewing the site. 

Ultimately, the food industry is essential and there is strong justification for projects to move forward if they enhance the domestic food supply but, of course, there is no point demanding things from the builder that are unachievable so they refuse to complete the work, abandon the site, go bust and then you are forced to find another builder or cancel the job. A more effective solution may be found by working with the builder than enforcing strict legal rights, but information is power in these circumstances, triggering informed discussions about acceptable solutions and challenge bad behaviours, where necessary. 

If you would like any assistance, the Wright Hassall Agriculture and Construction Teams would be happy to help.

About the author

Michael Hiscock

Partner - Head of Construction

Michael is a specialist in construction and engineering procurement, advising on a wide variety of works contracts.

Michael Hiscock

Michael is a specialist in construction and engineering procurement, advising on a wide variety of works contracts.

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