CLIENT SPOTLIGHT: Factory Five Racing

Factory Five Racing was founded in 1995. Over the years they have grown from a start-up business in a small garage to become the world's largest manufacturer of "build-it-yourself" component car kits. They employ a full-time crew of about 40 people, and are located in Wareham, Massachusetts (about an hour south of Boston). They make their products right here in the USA, in the heart of New England where American manufacturing was born.
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Fred and Danny Magnanimi grew up watching their father create beautiful, handcrafted jewelry in the family's Cranston, RI jewelry manufacturing business. When the boys grew up, Fred moved to New York and began working on Wall Street as an investment banker, while younger brother Danny, still enamored by the family business, stayed home. Increased competition from overseas businesses created significant challenges for the business, but Danny was confident he could find a way for the family business to evolve and thrive. This was his mission, this was his passion.
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        A Force Majeure Trap Within Construction Contracts

        Many people in the construction industry believe the force majeure clause waives the requirement for making a claim for an extension of time. This belief, however, is incorrect at least under the A201. If your project is delayed by the coronavirus, you should review your contract to determine your obligations for perfecting force majeure claims. Under the A201, that obligation would include sending a claim for an extension of time.

        Yes, the A201 does have a force majeure clause that excuses timely performance (if the Contractor is delayed by “causes beyond the Contractor’s control . . . then the Contract Time shall be extended”). See A201, § 8.3.1. However, the Contractor cannot take advantage of such clause unless it asserts a timely claim for an extension of time under Article 15. See A201, § 8.3.2. Indeed, 8.3.2 provides “Claims relating to time shall be made in accordance with applicable provisions of Article 15 [emphasis added].” The use of the word “shall” indicates (strongly) that such requirement is mandatory. A201, § 15.1.1 reiterates the mandatory nature of this requirement (“The responsibility to substantiate Claims shall rest with the party making the Claim [emphasis added].”).

        The trap that dooms most extension of time claims (including those based upon force majeure) is found at A201, § (“Notice of Claims”). That section sets forth a deadline for asserting such a claim. Specifically, provides:

        Claims by either party under this Section 15.1.3 shall be initiated within 21 days after the occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later [emphasis added].

        The unequivocal requirement of notice is reiterated in A201, “notice as provided in Section 15.1.3 shall be given [emphasis added].”

        Not only must the Contractor make such claim timely, but the claim itself must also include specific content. See A201, § Section provides the claim “shall include an estimate of cost and probable effect of delay on progress of the Work [emphasis added].” Under a continuing delay, however, the Contractor need only submit one claim.

        Many otherwise valid claims have been rejected because the party otherwise entitled to an extension of time failed to follow the contractually required mandates. If your project is delayed by the coronavirus, it is essential you read your contract thoroughly to understand your rights and obligations. A failure to do so might otherwise doom your claim.

        The firm’s Construction Practice is ready to advise and answer your contract questions. For additional information and resources, visit Partridge Snow & Hahn's COVID-19 Advisory Group page.