Builders, expert explore strategies to resolve real estate disputes
WITH the imminent impact of COVID- 19 on builders and contractors, experts have advanced the need for practitioners to evaluate terms of contract in alliance with legal experts to determine which principle of law that could be applicable for defense.
They said it is important that professionals in construction industry get ready for likely Post COVID- 19 issues.
Speaking at the webinar hosted by the Lagos state chapter of Nigerian Institute of Building ( NIOB), a real estate lawyer, Bayo Owojori who spoke on, “Impact of COVID- 19 on building contract and litigation”, expressed concerns that at the end of the pandemic, the courts might be flooded with a lot of disputes and cases that arising form the breach of contractual ownership.
Owojori said the pandemic caught the entire world unaware and unprepared. Following this, he noted that it is expected that a lot of business ownership will be affected by the incident and many business owners might be thrown out of office.
“The construction industry will be affected mostly because of the diverse nature of activities which is a common feature of the industry. Since contract is an agreement between two parties which the court can enforce, builders or contractors will not be able to hide under any excuse that they didn’t sign any document since the industry is majorly contract based”, he said.
He specifically listed construction contract, labour only contract, sub- contract, maintenance contract, supervision contract, and facility management contract and others as areas where dispute could arise. According to him, factors that could contribute to a breach of contract include when there has been agreement between two parties, which form a contract before the pandemic.
“For the purpose of contract litigation and dispute settlement, the reasonable time to talk about was April first, 2020 when the federal government announced a lockdown in Lagos, Ogun and Abuja”, he said.
He said factor that would determine liability in contract breach would depend on the nature of the contract as well as the content of the contract, when payment was received or made, when the agreement was enter into, the terms/ provisions for unforeseen circumstances, the duration of contract, and the degree of performance of the contract before the lockdown. The relevance of the parties to the contract, he said is also important for individuals to sue for any claim or benefit. Owojori said the defenses likely in the post covid- 19 pandemic court cases for builders could include, Court Majeure like an act of God and unforeseen circumstances that must have provision in the contract.
“It is only in court that you can declare Force Majeure as a defense. You have to see that it is applicable in the contract document. The event must be beyond the control of the party and the party must be unable to perform either partly or wholly and what the governing law of contract within the country states. The contractor must have exercised all possible best before he or she can declare Force Majeure”, he said.
He said other defense could be hinged on ‘ frustration of contract’ when failure to perform can’t be blamed on any of the parties. For instance, he said new byelaw or policies in a state that could make the contract impossible is a good defense. Other defense, he said is the applicable background of the law.
The Chairman of Lagos State Chapter, NIOB, Mr Sunday Wusu said the impact of COVID- 19 on the industry could be overwhelming stressing that a lot of manpower will be replaced by machines and will bring in an era of ‘ do it yourself’. According to him, COVID- 19 will spur up litigations especially as regards what the law says about force majeure, as well as strengthen building production capacity in the industry.