Sanral’s new standard contract exposes contractors to higher risks, says MDA
Amendments to the South African National Roads Agency Limited’s (Sanral’s) standard contract have made it significantly more difficult for contractors to deal with disruptions related to the construction mafia, warns construction and technology law specialist MDA Attorneys.
The term ‘construction mafia’ refers to local communities and business forums which disrupt construction sites, often violently, with demands that they are awarded work on the specific contract – a process which often results in costly delays, notes MDA.
MDA says Sanral has added five conditions to the clause on which contractors rely when dealing with strikes and riots, including construction-mafia type circumstances.
Called force majeure, this clause entitles contractors to claim time extensions, costs and termination of contracts.
“In South Africa, there is a high possibility that local communities and business forums will disrupt work, which causes prolonged delays and could necessitate ending the project,” says MDA Attorneys senior associate Kelly Meijers.
“Sanral’s previous contract made it difficult for contractors to define these disruptions as force majeure events, but Sanral’s new contract makes it even harder, posing significant risks for contractors.”
Under the new contract, contractors need to have five conditions in place for an event to be considered force majeure, says MDA.
The contractor needs to have engaged with those responsible for the disruptions. Specifically, they need to have met with leadership: recorded details, grievances and any threats made; and asked them to cease the unlawful conduct.
The contractor must also have proof of the riot, commotion, disorder, strike or lockout, and of any unlawful conduct; all threats and unlawful conduct must have been reported to the South African Police Service; an urgent application must have been launched in court which correctly identifies the parties and defines the unlawful conduct to be interdicted; and lastly, the contractor must have ensured that the court order is enforced.
Meijers says contractors who are not aware of the additional requirements are at risk of being unable to obtain time extensions on their contracts with Sanral, which may result in delay damages and penalties.
“If the conditions do not meet the definition of force majeure, contractors cannot terminate the contract for that reason,” she notes.