Do I have to meet my contract’s completion date with what’s going on? I am going to resist the urge to give the typical lawyer answer, “it depends.” It does, but with what is going on right now, don’t worry about completing it, even though construction is considered an “essential business” under Governor Lamont’s order. No customer should sue a home improvement contractor for not meeting a completion date during this COVID-19 or any other pandemic unless there is, in my opinion, some health-related emergency. Like you were finishing the customer’s only bathroom and they do not have a toilet. If a customer threatens to sue your contracting business, and their only reason is you should have finished on time, and you didn’t because you had symptoms, or couldn’t get supplies, or couldn’t get workers, or some other legitimate, human reason due to what’s going on, don’t worry. You’ve got some law behind you.
But we are starting to see, believe it or not, state consumer protection complaints against contractors for not finishing projects in the past few weeks. Unbelievable.
First, you should know that Connecticut’s Home Improvement Act requires your written agreement to have a start date and a completion date and be in writing (there are a lot of other requirements, including different ones if the homeowner’s insurance company is paying your bill). These requirements exist to protect the consumer, because many “fly by night” contractors show up, take the money and never return. The requirements give the consumer some clarity to the contractor’s obligations. The law does not say you have to finish by the completion date or you are in trouble. There are many reasons beyond the contractor’s control that could lead to a delay – material shortage, illness, injury, work strikes, heck, a virus pandemic. The law does take this into account.
For one, there is something called the “impossibility defense” to performance of a contract. While COVID-19 might not make it impossible to meet the completion date under the current state of the law, I think that the law will evolve as a result of the pandemic and expand to include some scenarios arising out of the current situation. Hopefully, judges will look closely at the reasonableness of the contractor’s decision not to perform, or the length of the delay. Certainly, if there is a government quarantine or lockdown, your business has a good defense.
Also, certain contracts use “time is of the essence” clauses. You usually see these provisions in real estate contracts or large corporate deals. When that language is used, it means things have to happen when the parties say they have to happen. You may think that includes the home improvement contract completion date. But it really doesn’t. When the words “time is of the essence” aren’t in your agreement, you have a reasonable time to perform. And reasonableness involves a consideration of what’s happening in the country right now.
Your written agreement, which is required under Connecticut and most any state’s law, should have language that expressly excuses your business from performing if something like the current situation happens. They are called “force majeure” clauses and basically say if something really crazy happens, you your business isn’t responsible for any delay unless you should have foreseen it. The technical definition of a force majeure clause is “a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event or effect that the parties could not have anticipated or controlled.” Like labor strikes, hurricanes, “acts of god” and things like that. Those clauses also have language like disease and epidemic. We now advise clients to include “pandemic” and “compliance with governmental rules, regulations or orders” so our clients have more language to protect them.
Above all – communicate with your customers. Call them. Stay in touch, let them know as best you can when you think you can finish the project. Be human, you’re less likely to be sued.
I’ll leave you with a banana story. Back in 1899, one fellow ordered 436 bunches of bananas and agreed to pay $326.25. The governor of Texas had issued a quarantine order and so the seller had to ship the bananas the long way, around New Orleans and Mississippi. I guess the bananas showed up brown. Since the quarantine order was in place when the buyer agreed to buy the bananas, he had to pay.
So, if you sign up a new customer now, knowing what’s happening, put the completion date out far, and then add a week or two. Be safe, and manage customer expectations.