6.09.2021

Unprecedented ! NZS3910, Risk Allocation and COVID-19

The first Level 4 lockdown of 25 March 2020, implemented in response to the COVID-19 pandemic, exposed various flaws in the risk allocation regime under standard construction contract NZS3910.   

In light of the upcoming review of NZS3910, this essay analysed how it handles risk.  It considered how the government’s guidelines for the public sector construction industry on handling variations during the Level 4 lockdown, affected risk allocation under NZS3910.  And it considered whether the upcoming review should recommend changes to risk allocation under NZS3910. 

Ultimately, this essay made several recommendations:

  • A force majeure clause should be inserted to cover pandemics, and legislation / regulation passed in response to pandemics. 
  • A schedule or risk register should be included to list all risks covered under the contract, to help contractors accurately price risks. 
  • NZS3910’s theory of risk allocation should be changed from a fault-based regime to one which allocates risk to the party best placed to bear it. 
  • Greater use should be made of alternate tendering practices, like those used in Norway, which encourage principals to choose the middle of three tenders, ranked by price, as these enable tenderers to properly price risk.

Lydia’s essay won first prize in the New Zealand Society of Construction Law Essay Prize 2021.  To read Lydia’s essay please click here.

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Force Majeure – Not A Get Out Of Jail Free Card
Woolworths Group Ltd v Twentieth Super Pace Nominees Pty Ltd [2021] NSWSC 344
17.06.2022 Posted in Trade and Transport
Payment Claims: Incorrect Due Date From Delayed Delivery
Nicholls Group Projects Ltd v Plan Design Build Homes Ltd
20.05.2022 Posted in Construction
Employment Court Deems Gloriavale Residents Employees
The definition of “employee” in the Employment Relations Act 2000 (ERA) can at times be tricky to navigate; recent cases involving builders, couriers, and uber drivers can attest to the issues tha...
18.05.2022 Posted in Employment
New proposals on modern slavery place higher responsibilities on NZ organisations
Over recent years, modern slavery has become a more prominent issue in New Zealand.
13.05.2022 Posted in Business Advice
Insurance Contracts Bill – submissions on exposure draft closing soon
As we reported in late February, the Ministry of Business, Innovation and Employment (MBIE) is seeking submissions on the exposure draft Insurance Contracts Bill.  Submissions close on 4 May 2022. MB...
20.04.2022 Posted in Insurance
Matariki and Fair Pay Agreements
Matariki Te Pire mō te Hararei Tūmatanui o te Kāhui o Matariki (Te Kāhui o Matariki Public Holiday Bill) received Royal Assent yesterday, and the new Act comes into force today – 12 April 20...
12.04.2022 Posted in Employment
A Landmark Change? – Proposed reform of the occupational regulation of engineers
Engineers engage in building work that is critical to public safety. Despite this, few restrictions are placed on who can carry out and supervise complex and specialised projects that require high levels of professional judgement, skill and technical competence.
07.04.2022 Posted in Construction
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.
-->