United States: Practical Tips For Owners And Contractors Impacted By Hurricanes Harvey and Irma

Anyone watching what has happened in Houston, and what is predicted to happen in Florida, immediately thinks about the safety and well-being of those affected by Hurricanes Harvey and Irma. Once the rain stops, the water recedes, and the aftermath of destruction is assessed, both areas and their residents will be looking at a long road to recovery, much in the same way as New Orleans in 2005 (Hurricane Katrina) and New York/New Jersey in 2012 (SuperStorm Sandy). Among the many challenges that lie ahead, owners and contractors of existing projects, whether in Houston, Florida, or in other parts of the country, as well as those involved in new projects to rebuild, must take steps to assess the impacts and identify their contractual rights and obligations. For those in Houston and Florida, this will no doubt mean working closely with their insurance carriers to recover project related losses. For those in other parts of the country, contracting parties need to assess the impact, if any, on the projects and ascertain their available remedies. 

Potential Hurricane-Related Impacts

Hurricanes can cause supply side and demand side issues with raw materials, supplies, and equipment, especially at critical junctures such as ports and warehouses due to their location on or near the coast. Natural disasters often affect the construction industry in the form of price increases and material scarcity. For example, oil shortages during a hurricane can greatly affect commercial contractors who rely upon diesel-powered machinery. Similarly, natural gas shortages cause prices to spike, which increases the cost of producing asphalt, paints, and tires for heavy machinery. 

Hurricanes can also impact the timely flow of materials, supplies, and equipment. In 2005, Hurricane Katrina created shortages of resins produced from oil that manufacturers needed to create polyvinylchloride (PVC) and other vinyl products. Damage caused by Katrina in the Gulf of Mexico disrupted supplies of ethylene and natural gas during the second half of 2005. In the aftermath of Katrina, repair efforts along the Gulf Coast quickly consumed many building materials, creating short term shortages and further price hikes. If equipment, materials, and supplies, are coming from the impacted areas, projects run the risk of delay. Moreover, supplies, equipment, materials and labor may be diverted to Houston and Florida, which could further impact your project. 

Remedies Contractors May Seek From Hurricane Impacts

The general rule under most construction contracts is that the contractor is required to perform and see the work through to completion, or else run the risk of default, termination, and/or damages. However, external events beyond anyone's control or anticipation often disrupt this contractual equilibrium. With that in mind, it is critical for owners and contractors to understand the impacts that flow from such events, as the fallout from these unforeseeable acts can greatly impact a contractor's ability to perform under its contract.

To accommodate for the unknown, most contracts provide a force majeure clause to limit and allocate risk. Force majeure (which is French for "greater force") refers to events that are beyond the control of the contractor and generally wreak havoc on jobsites in the form of physical damage, in addition to cost and time impacts. Force majeure events typically include most natural disasters—fire, flood, earthquake, hurricane, drought, and other "Acts of God"—each of which are characterized by their complete unforseeability at the time of contract drafting. Notably, many construction contracts do not even use the term "force majeure," but rather employ broad language addressing a variety of causes beyond the control of the party seeking to invoke the provision. See, e.g., AIA A201-2007, § 8.3.1 ("If the contractor is delayed ... by ... other causes beyond contractor's control."). 

In most standard contracts, both the owner and contractor will generally share the risk of loss for force majeure events, where contractors are entitled to a time extension, but not compensation. Thus, a contractor can rely on the force majeure clause to seek a time extension and avoid an assessment of liquidated damages by the owner. While a contractor will likely be entitled to additional time, contractors (unless the contract expressly provides otherwise) will not be allowed to recover delay damages as a result of the unforeseen event. Thus, contractors need to assess whether their projects will be impacted by Harvey and Irma, and determine what remedies their contracts provide. 

As far as recovery for price escalation, most contracts place the risk of price escalation on the contractor. The AIA documents, for example, do not include an escalation clause. If a contract does contain such escalation clause, the clause will typically provide a time period after which the escalation applies.

Disaster Relief

Finally, the House of Representatives recently passed a $7.9 billion aid package for Hurricane Harvey victims, and the Senate has approved an overall package valued that adds $7.4 billion, for a total of $15.3 billion. Undoubtedly, money will be made available in Florida as well. Both House and Senate bills have $7.4 billion going to the Federal Emergency Management Agency's ("FEMA") disaster relief fund. Because federal money is involved, those contractors coming to the aid of a disaster relief area need to be aware of issues arising out of federal contracts issued through FEMA. Contractors working primarily in the commercial world may not be aware of the multitude of regulations they are subject to under the Federal Acquisition Regulations ("FAR") and should take steps to familiarize themselves with the rules. While most of the contracts would likely be firm-fixed price, contractors working under a cost reimbursement contract may not be familiar with the regulations surrounding time-keeping and accounting practices. Mistakes in this area could open up contractors to issues involving false claims. Contractors working with federal money would also be subject to Davis-Bacon Act requirements, which establish the requirement for paying the local prevailing wages on public works projects for laborers and mechanics. Prudent contractors should familiarize themselves with any red tape issues prior to pursuing or accepting contracts involving federal funds. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions