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Owing to the damaging winds and heavy rain brought on by recent adverse weather conditions, including flooding, businesses may struggle to comply with obligations in their commercial contracts on time or even at all! In this article, our Corporate & Commercial and Construction teams consider force majeure clauses and how they may assist in such circumstances.

Background
A “force majeure” (FM) clause can be included in a contract to waive a delay or failure to perform an obligation due to events or circumstances outside the ‘reasonable control’ of the party under that obligation (e.g. adverse weather conditions, such as flooding). Generally speaking, a FM clause will either suspend a contract for the period the FM event is continuing, or for a set period of time. Depending on the wording of the contract, the FM clause may come to your rescue, or you may still be liable for the consequences of your failure to fulfil that obligation.

Definition of FM
Each contract will have its own definition of FM. The level of detail included in FM clauses can vary from one agreement to another, but some will set out examples, or even an exhaustive list, of events or circumstances considered to be beyond a party’s control. “Adverse weather” and specifically “flooding” will often make it into this list. Other clauses do not specify ‘weather’ but use general wording such as “any event or circumstance outside the party’s reasonable control”; in which case it will be a matter of interpretation and considering the full circumstances to determine whether bad weather is caught.

Construction Industry
Adverse weather is often a defined “Relevant Event” in construction contracts for the purposes of Force Majeure (FM). As weather can affect the timings of a project, there are usually obligations on the Contractor in a construction contract to properly inform the Employer of these event by a written notice. Weather can also It can be factored in to the Interim/ Stage Payment Calculations if site materials are not properly protected from the elements.

JCT
Under JCT, when an FM event occurs, the Contractor is typically required to notify the Employer in writing and may be granted an extension of time to complete the works. This is crucial in avoiding liquidated damages (LDs) or general damages for delays/ extensions that are beyond the Contractor’s control. However, it’s imperative to note that JCT contracts do not automatically relieve parties from cost implications arising from FM events and any bespoke schedule of amendments may vary the JCT standard position.

NEC Approach to FM
Comparatively, the NEC (New Engineering Contract) suite of contracts, another prominent choice in the UK, addresses FM under the term “compensation events.” This approach is slightly different from JCT, offering a more proactive management of such events. In NEC contracts, adverse weather conditions are considered a compensation event if they occur less frequently than once in ten years and impact the completion date or cost. The contractor must notify and provide detailed information to claim relief for a compensation event. So generally it is much more difficult to obtain time and/or money under the NEC suite – subject again to any bespoke amendments.

Contractual Preparedness and Adaptation
The recent severe weather conditions underscore the need for careful consideration and clear articulation of FM clauses in construction contracts. Parties should not only define FM events with sufficient specificity but also outline the procedures for notification and claims for extensions or cost adjustments.

Both JCT and NEC contracts offer frameworks to address FM events, but the approach and the extent of relief provided can vary significantly. It’s essential for Contractors and Employers to understand these nuances and ensure that construction contracts are tailored to address potential weather-related disruptions effectively.

For assistance in interpreting FM clauses in existing construction contracts, particularly in the wake of recent extreme weather events, the Construction team is here to help. Please get in touch.

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