Following the latest storm to hit the UK many businesses are feeling the strain of performing under agreed contracts.
Not only could this have the potential for breach of contract claims but also cause significant problems with trade and ability to manage cash flow. So, is there anything that can be done to allocate risk during extreme adverse weather conditions?
According to Charlotte Lowley, a specialist commercial and private client lawyer with national firm Clarke Willmott LLP, the potential answer lies within a force majeure clause.
A force majeure clause is a contractual term whereby one, or both, of the parties are excused from performance under the contract, either in whole or part.
In addition, the clause could allow for a suspension of performance, or to claim an extension of time for performance due to a specific event beyond its control.
Charlotte said: “A well drafted agreement should contain a carefully formulated force majeure clause to protect businesses from adverse weather like the relentless storms we have been experiencing of late.
“Contrary to common belief, in English law there is no common law doctrine of force majeure”.
“The internationally used FIDIC Conditions of Contracts define force majeure as an exceptional event which is beyond the control of the party affected, which the party could neither have foreseen nor provided against before entering into the contract.
“The ‘event’ triggering the force majeure clause will be determined by the construction and subsequent interpretation of the clause. It is therefore vitally important that the wording is considered correctly when drafting the contract.”
If this clause is not included or correctly drafted the defaulting party will, most likely, be liable for non-performance of the contract, even though it is not at fault. In addition, if the clause is incorrectly drafted, it may not be triggered by events such as the current storms.
Bad weather does not automatically trigger the clause. This is determined on a case by case basis dependant on the circumstances of the parties. In general terms, it is unlikely that general ‘bad weather’ could trigger this clause, unless it amounted to something more extreme than rain and high winds.
Charlotte continues: “Rain is a normal and common occurrence and can reasonably be foreseen. More extreme weather, such as excessive rainfall causing floods, is less forseeable. Again, if the clause is well drafted it should allow you to rely on this provision in more extreme weather.
“It is therefore vitally important, not only that this clause be included in your contract, but that the clause is drafted in a way to suit your individual business needs. This can prevent claims for non-performance of the contract being brought against you and also provide much needed clarity for you where the other party tries to avoid its contractual obligations due to adverse weather.”
Clarke Willmott LLP is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.
For more information visit www.clarkewillmott.com
"A well drafted agreement should contain a carefully formulated force majeure clause to protect businesses from adverse weather like the relentless storms we have been experiencing of late."