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
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.