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The Covid-19 Pandemic Had a Significant Impact on Prices and the Scarcity of Materials Used in Civil Construction
The pandemic affected the industry, creating a supply vacuum, caused material shortages, increased construction input prices, and triggered contract imbalances, directly affecting consumers and companies. Such circumstances increased the need for value modifications and expansion of contract terms under unpredictable conditions.
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Attorney Cristiano Mayrink, partner at Lima Netto Carvalho Abreu Mayrink Law Firm, says that “Steel and concrete prices have increased by 40% and when the contracts were made, the cost composition spreadsheets did not foresee such a significant increase.” Yesterday, February 3, Usiminas raised its product prices by another 15% in January and now in the first two days of February, announced another 15% increase. In other words, in 32 days of 2021, the price of steel increased by 30%.
Cristiano emphasized that the affected parties should do everything possible to reach an agreement to avoid legal treatment of the issue, such as sending a letter informing the reason for the contract change, a spreadsheet of the new cost, and seeking negotiation.
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He explained: “If you’re not successful, you should go to court.” Both the Civil Code and Law No. 8.666 / 1993 provide for contract changes due to unforeseen special events, such as the case of Covid-19.
In public works, the contracting company submitted to the requirements of economic-financial balance for analysis by the contractor (Union, State, Municipality, or Public Administration), once the contract is approved, the contract will be modified through the signing of addendums.
