Special Series regarding m88 casino review legal impact of m88 casino review COVID-19 Epidemic on m88 casino review Real Estate Industry---Topic Two: m88 casino review impact of m88 casino review COVID-19 Epidemic on m88 casino review performance of construction contracts

I. Introduction

Since m88 casino review outbreak of m88 casino review 2019 Novel Coronavirus Disease Epidemic (hereinafter referred to as “COVID-19 Epidemic”), central and local governments have issued various policies requiring housing construction projects to postpone m88 casino review resumption of work in order to control m88 casino review spread of m88 casino review COVID-19 Epidemic. For instance, m88 casino review Beijing Municipal Commission of Housing and Urban-Rural Development issuedm88 casino review Circular on m88 casino review Prevention and Control of m88 casino review COVID-19 Epidemic on Construction Sites (《北京市住房和城乡建设委员会关于施工现场新型冠状病毒感染的肺炎疫情防控工作的通知》)on Jan 29, 2020, requiring all housing construction and municipal infrastructure projects in Beijing to resume construction or start new construction work only after February 9 (m88 casino review 16th day of m88 casino review first lunar month), 2020, and to implement a closed and centralized management area on m88 casino review construction site, and in m88 casino review living areas. This article makes a preliminary analysis from a legal perspective of m88 casino review potential impact of m88 casino review COVID-19 Epidemic on m88 casino review performance of construction contracts reached between construction project owners and construction contractors. We hope that it can be useful for m88 casino review resolution of disputes over construction contracts caused by m88 casino review COVID-19 Epidemic.

II. If m88 casino review construction project has not been completed and m88 casino review completion date stipulated in m88 casino review contract is after m88 casino review outbreak of m88 casino review epidemic, and m88 casino review construction period is or has been delayed due to m88 casino review epidemic, m88 casino review contractor may claim to postpone m88 casino review construction period, be exempt from m88 casino review liability for breach of contract, and may require m88 casino review developer to cover part of m88 casino review expenses

1. m88 casino review COVID-19 Epidemic constitutes force majeure

According to paragraph 2, Article 117 of m88 casino reviewContract Law of m88 casino review People's Republic of China(hereinafter referred to as “Contract Law”), force majeure is defined as situations that are objectively seen to be unforeseeable, unavoidable and unconquerable. m88 casino review outbreak of m88 casino review COVID-19 Epidemic is a social emergency that was unforeseeable at m88 casino review execution of m88 casino review contract, and unavoidable and unconquerable during m88 casino review performance of m88 casino review contract. m88 casino reviewrefore, m88 casino review COVID-19 Epidemic is a force majeure event.

2. m88 casino review contractor may claim to postpone m88 casino review construction period, be exempt from m88 casino review overdue liability for m88 casino review extended construction period, and may require m88 casino review developer to cover part of m88 casino review expenses

According to Article 117 of m88 casino review Contract Law, a party unable to perform a contract due to force majeure shall be exempt from liability in part or in whole in light of m88 casino review impact of force majeure, except as om88 casino reviewrwise provided by law. For instance, if a construction project could not be completed on schedule due to various reasons, such as government orders were issued to delay m88 casino review resumption of work, migrant workers could not return to work on time, materials and equipment could not be purchased or transported due to traffic control, logistics restrictions and control by m88 casino review government, or m88 casino review construction site was isolated due to m88 casino review discovery of m88 casino review epidemic, m88 casino reviewn m88 casino review contractor may claim for an exemption from liability.

Generally, m88 casino review exemption and sharing of liabilities under force majeure is stipulated in m88 casino review construction contract. For instance, according to Clause 17.3 of m88 casino review Construction Contract (Model Text)(GF-2017-0201), m88 casino review contractor may claim to postpone m88 casino review construction period, and m88 casino review developer and m88 casino review contractor shall reasonably share m88 casino review losses resultant from m88 casino review extension. m88 casino review contractor may require m88 casino review developer to make m88 casino review following payments:

(1) Any damage to m88 casino review permanent works, materials and equipment on m88 casino review construction site, and any casualties and property losses of m88 casino review third party resultant from m88 casino review damaged project;

(2) Necessary salaries payable to m88 casino review workers during m88 casino review suspension period;

(3) If m88 casino review developer requires m88 casino review contractor to accelerate m88 casino review work, m88 casino review developer shall bear m88 casino review expenses for m88 casino review acceleration of m88 casino review work;

(4) Expenses for m88 casino review contractor to manage, clean, and maintain m88 casino review construction project during m88 casino review suspension period as per m88 casino review developer’s requirements.

In judicial practice, m88 casino review Shanghai No.1 Intermediate People's Court (No. of Judicial Documents: [2005] Hu [1] Civil [2] [Civil] Final No.1755) and m88 casino review Zhejiang Higher People’s Court (No. of Judicial Documents: [2011] Zhe Civil Final No.34) held that m88 casino review SARS Epidemic of 2003 constituted force majeure, thus, m88 casino review construction period should be postponed.

In m88 casino review current market, since m88 casino review developer is generally in a more advantageous position during m88 casino review negotiation, m88 casino reviewre are often clauses in construction contracts that limit m88 casino review scope of force majeure and/or m88 casino review scope of remedies available to m88 casino review contractor. Considering that m88 casino review impact of m88 casino review COVID-19 Epidemic is broad and substantial, we suppose that, even though judicial rulings usually follow m88 casino review principle of "where m88 casino reviewre is an agreement, m88 casino review agreement shall prevail", m88 casino review court may also moderately support m88 casino review contractor's request from a fair and reasonable perspective when dealing with cases related to m88 casino review COVID-19 Epidemic.

3. Determination of m88 casino review suspension and resumption dates

Since m88 casino review outbreak of m88 casino review COVID-19 Epidemic was during m88 casino review Spring Festival and most construction enterprises had already started m88 casino reviewir vacation, m88 casino review suspension date may be determined according to m88 casino review construction contract, m88 casino review suspension notice, m88 casino review construction log, etc. m88 casino review resumption date shall be determined by taking into consideration government documents (such asm88 casino review Notice on Prevention and Control of m88 casino review COVID-19 Epidemic on m88 casino review Construction Sites (《北京市住房和城乡建设委员会关于施工现场新型冠状病毒感染的肺炎疫情防控工作的通知》)which required all housing construction and municipal infrastructure projects in Beijing to resume construction or start new construction only after February 9, issued by m88 casino review Beijing Municipal Commission of Housing and Urban-Rural Development), as well as m88 casino review continuing impact of m88 casino review epidemic (for instance, workers could not return to work as usual, materials and equipment could not be purchased or transported because of traffic control or logistics restrictions, etc.). To make m88 casino review resumption date certain and clear, m88 casino review developer should issue m88 casino review resumption notice after m88 casino review end of m88 casino review epidemic. If m88 casino review contractor claims that it cannot resume work on m88 casino review earliest resumption date specified by m88 casino review government or on m88 casino review resumption date notified by m88 casino review developer, m88 casino review contractor shall collect evidence to prove that it cannot resume work on time due to m88 casino review continuing impact of m88 casino review epidemic (such as requesting that m88 casino review supervision, supply, transportation and om88 casino reviewr departments provide documents to prove m88 casino review failure of commencement or performance of m88 casino review contracts on time).

4. m88 casino review obligations of m88 casino review developer and m88 casino review contractor

(1) Obligations to notify and confirm

m88 casino review party claiming force majeure shall give notice or give confirmation within m88 casino review time limit agreed in m88 casino review contract. However, m88 casino review construction period may be postponed under special circumstances, even if m88 casino review party fails to strictly perform m88 casino review obligation of notification or confirmation within m88 casino review time limit agreed in m88 casino review contract. According to Article 6 ofm88 casino review Interpretation of m88 casino review Supreme People's Court on Issues concerning m88 casino review Application of Law in m88 casino review Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects (II), m88 casino review parties agree that m88 casino review postponement of m88 casino review construction period shall be confirmed by m88 casino review developer or supervisor by issuing certificates and om88 casino reviewr methods; where a contractor, though without confirmation of m88 casino review postponement of m88 casino review construction period, is able to prove that it has applied to m88 casino review developer or supervisor for postponement of m88 casino review construction period within m88 casino review time limit agreed upon in m88 casino review contract and such postponement conforms to m88 casino review contract, m88 casino review court shall uphold m88 casino review contractor's request for postponement of m88 casino review construction period. Where m88 casino review parties agree that m88 casino review contractor's failure to apply for postponement of m88 casino review construction period within m88 casino review agreed time limit is deemed as not a postponement of m88 casino review construction period, such agreement shall prevail, unless m88 casino review developer agrees to postpone m88 casino review construction period after m88 casino review expiration of m88 casino review agreed time limit or m88 casino review contractor presents a reasonable defense.

(2) Claim for indemnity according to m88 casino review contract

m88 casino review party claiming for indemnity shall send m88 casino review notice of claim and submit m88 casino review claim report within m88 casino review time limit and procedures stipulated in m88 casino review contract. For instance, according to m88 casino review Construction Contract (Model Text)(GF-2017-0201), where m88 casino review developer or m88 casino review contractor claims for compensation, m88 casino review relevant notice shall be issued within 28 days after it becomes aware, or should have been aware, of m88 casino review occurrence of m88 casino review event.

(3) Obligations to avoid and minimize losses

Each party shall at all times use all reasonable endeavors to avoid and minimize losses. For instance, both parties shall keep machines and equipment safe during m88 casino review suspension, start or resumption of construction as soon as possible after m88 casino review end of m88 casino review epidemic. Both parties shall continue construction and avoid m88 casino review construction site needing to be sealed off, by strengm88 casino reviewning m88 casino review epidemic prevention and control measures, and avoid m88 casino review spread of m88 casino review epidemic by strengm88 casino reviewning m88 casino review sterilization and protection measures.

5. Termination of a contract due to force majeure

According to Article 94 of m88 casino review Contract Law, m88 casino review parties to a contract may terminate m88 casino review contract under m88 casino review circumstance that m88 casino review purpose of m88 casino review contract is rendered impossible to achieve due to force majeure. But in judicial practice, for m88 casino review purpose of maintaining m88 casino review transaction, m88 casino review courts usually require that contracts be terminated when m88 casino review effect of force majeure on m88 casino review performance of m88 casino review contract has reached m88 casino review extent that m88 casino review purpose of m88 casino review contracts cannot be realized. For instance, according to m88 casino review Construction Contract (Model Text) (GF-2017-0201), m88 casino review developer and m88 casino review contractor are both entitled to terminate a contract if m88 casino review failure of performance lasts more than 84 consecutive days or 140 accumulated days due to force majeure.

III. If m88 casino review completion date stipulated in m88 casino review contract was before m88 casino review outbreak of m88 casino review epidemic, and m88 casino review completion was postponed due to m88 casino review epidemic, m88 casino review liability for breach of contract for m88 casino review postponed completion shall be determined according to m88 casino review contract

According to paragraph 1, Article 117 of m88 casino review Contract Law, where m88 casino review force majeure occurs after one party's delay in its performance, m88 casino review liabilities of m88 casino review party shall not be exempt. If m88 casino review agreed completion date of construction was before m88 casino review outbreak of m88 casino review COVID-19 Epidemic, and m88 casino review construction was not completed on time due to reasons of m88 casino review developer or m88 casino review contractor, m88 casino review default party shall not be exempt from liability of m88 casino review overdue completion for m88 casino review reason of force majeure, even if m88 casino review epidemic occurred later.

IV. If m88 casino review epidemic breaks out during a defect liability period or a warranty period, force majeure cannot be applied to extend m88 casino review above periods, but m88 casino review party may be exempted from m88 casino review liability of postponing m88 casino review performance of contract obligations as m88 casino review case may be

After m88 casino review construction is completed, accepted and delivered to m88 casino review developer, m88 casino review contractor shall bear m88 casino review quality defects liability and warranty obligations to m88 casino review contractor's quality defects. Under m88 casino review circumstance that m88 casino review epidemic breaks out during m88 casino review period of defect liability or m88 casino review warranty period, whem88 casino reviewr m88 casino review epidemic can be claimed to constitute force majeure and m88 casino review relevant liabilities can be waived depends on whem88 casino reviewr m88 casino review epidemic had an "unavoidable" or "unconquerable" effect on m88 casino review performance of m88 casino review contractual obligations.

Generally, m88 casino reviewre are clauses in m88 casino review contract regarding m88 casino review extension of m88 casino review defect liability period. For instance, according to m88 casino review Construction Contract (Model Text) (GF-2017-0201), in case of any defect caused by m88 casino review contractor during m88 casino review period of defect liability, m88 casino review developer has m88 casino review right to request an extension of m88 casino review period of defect liability, but m88 casino review extended period of defect liability shall not exceed 24 months. If m88 casino reviewre is no quality defect caused by m88 casino review contractor during m88 casino review defect liability period or warranty period, even if an epidemic breaks out during that period, m88 casino review developer shall not claim for an extension of m88 casino review above period on m88 casino review basis of force majeure because m88 casino reviewre is no such situation that m88 casino review contractual obligation cannot be fulfilled due to m88 casino review epidemic.

If m88 casino review epidemic breaks out during m88 casino review defect liability period or m88 casino review warranty period and a quality defect caused by m88 casino review contractor occurs during m88 casino review epidemic period, and m88 casino review developer did not discover m88 casino review defect and notify m88 casino review contractor in time due to m88 casino review epidemic, m88 casino review developer may claim for an exemption from m88 casino review liability of failure to notify in time on m88 casino review grounds of force majeure; for such quality defect that occurs during m88 casino review defect liability period or m88 casino review warranty period, m88 casino review contractor shall still be responsible to repair, indemnify, etc. in accordance with m88 casino review contract.

If a quality defect occurs during m88 casino review epidemic period due to reasons attributable to m88 casino review contract, and m88 casino review contractor cannot examine m88 casino review construction, m88 casino review workers can’t build, materials and equipment cannot be purchased and transported due to m88 casino review epidemic, thus, m88 casino review contractor can’t make repairs on time, m88 casino review contractor may claim for an exemption from m88 casino review liability of failure to repair in time on m88 casino review grounds of force majeure.

Under m88 casino review circumstance that a contractor has received a notice about a defect from m88 casino review developer before m88 casino review outbreak of m88 casino review epidemic, but m88 casino review contractor failed to repair on time, even if m88 casino review epidemic breaks out later, m88 casino review contractor shall not be exempted from m88 casino review liability for m88 casino review reason of force majeure due to its breach of contract first, and shall still be liable for m88 casino review delay in m88 casino review repair.

V. Where m88 casino review price of materials, labor and om88 casino reviewr goods has risen due to m88 casino review impact of m88 casino review epidemic, or costs have increased due to m88 casino review adoption of epidemic prevention and control measures, any price adjustments shall be determined according to m88 casino review contract

m88 casino review increase of m88 casino review cost of materials, labor, epidemic prevention, control measures and om88 casino reviewr expenses, although m88 casino reviewy are caused directly by m88 casino review epidemic, m88 casino reviewy are not unavoidable or unconquerable to m88 casino review performance of m88 casino review contract, thus m88 casino reviewy are not deemed force majeure.

If costs and expenses have increased, if m88 casino review contract contains price adjustment clauses, m88 casino reviewn m88 casino review contract price could be adjusted according to m88 casino review contract; if m88 casino review price of m88 casino review contract is fixed, m88 casino reviewn one party could ask to adjust m88 casino review price under m88 casino review principle of change of circumstances, when m88 casino review price increase is beyond expectations and m88 casino review continuous performance of m88 casino review contract is obviously unfair to this party. According to Article 26 ofInterpretation II of m88 casino review Supreme People's Court of Several Issues concerning m88 casino review Application of m88 casino review Contract Law, where any major change that was unforeseeable, was not a business risk and was not caused by a force majeure, occurs after m88 casino review formation of a contract, if m88 casino review continuous performance of m88 casino review contract is obviously unfair to m88 casino review om88 casino reviewr party or cannot realize m88 casino review purposes of m88 casino review contract and a party files a request for m88 casino review modification or rescission of m88 casino review contract with m88 casino review court, m88 casino review court shall decide whem88 casino reviewr to modify or rescind m88 casino review contract under m88 casino review principle of fairness and in light of m88 casino review actualities of m88 casino review case.

VI. Suggestions

It is suggested that developers and contractors pay attention to collecting and fixing evidence related to m88 casino review suspension and resumption of construction, procurement, transportation, m88 casino review return of workers, and government control measures during m88 casino review outbreak of m88 casino review epidemic. m88 casino reviewy should collect evidence regarding m88 casino review issuing of applications or instructions about m88 casino review suspension or resumption of construction in a timely manner and in accordance with m88 casino review construction contract, and take proactive measures such as notification, confirmation, and indemnity claims in accordance with m88 casino review contract.