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Force Majeure
Expect the unexpected
Introduction In recent years there have been a number of major events with the potential to disrupt even the best planned construction programmes. Volcanic ash, swine and avian flu and most recently the riots demonstrate the unpredictable nature of the world.
When unforeseen events impact on the delivery of a project, both employer and contractor will look to the contract to understand the consequences in terms of time and money.
Contents Introduction The JCT approach What is force majeure? The NEC approach Other points to note

Briefing Note Author: Andrew Keeley Date: October 2011

The JCT approach Under the JCT suite of contracts, the Relevant Events entitling the contractor to an extension of time for completion include:
Civil commotion The use or threat of terrorism Force majeure Loss or damage occasioned by any of the Specified Perils, which include riot and (again) civil commotion.

However, as these events are not Relevant Matters the contractor cannot claim loss and expense: the contractor will get more time but not more money. If any of these events cause a suspension of the works for two months (or such other period as the parties may have agreed in the Contract Particulars), then either party may terminate the contract.

What is force majeure? The term force majeure is not defined under the JCT contracts. Unhelpfully, it is a concept derived from French law with no agreed meaning and limited English case law to assist, particularly in a construction context. In Matsoukis v Priestman & Co, Bailhache J. stated that:
I am not going to attempt to give any definition of the words force majeure, but I am quite satisfied that I ought to give them a more extensive meaning than act of God or vis major. The difficulty is to say how much more extensive.1 Because of such difficulties, it is not uncommon for parties to insert their own definitions of force majeure.

The NEC approach There is no reference to force majeure under NEC3. Instead, Compensation Events include:

Matsoukis v Priestman & Co [1915] 1 K.B. 681

Charles Russell LLP is a limited liability partnership registered in England and Wales, registered number OC311850, and is authorised and regulated by the Solicitors Regulation Authority. Any reference to a partner in relation to Charles Russell LLP is to a member of Charles Russell LLP or an employee with equivalent standing and qualifications. A list of members and of non-members who are described as partners, is available for inspection at the registered office, 5 Fleet Place, London EC4M 7RD.

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Employers risks, such as loss of or damage to the works, plant or materials due to riots and civil commotion; and events which (a) neither party could prevent and (b) an experienced contractor would have judged to have such a small chance of occurring that it would have been unreasonable for him to allow for it.

Unlike the position under JCT contracts, in NEC3 there are no events which entitle the contractor to claim only an extension of time: if a Compensation Event occurs, the contractor will get both time and money. If the later category of event (i.e. an event which neither party could predict, and a experienced contractor would not have allowed for) causes a forecast delay of 13 weeks or more to the completion date, the employer at its sole discretion may terminate the contract.

Other points to note Regardless of whether the contractor is claiming time and money as a result of avian flu, rioting or some other unforeseen event:
The contractor must comply with the relevant procedural requirements for claiming loss and expense and/or an extension of time. For example, NEC3 requires the contractor to give notice of a compensation event within eight weeks The contractor will need to prove that the event has in fact caused the alleged period of delay

More information Andrew Keeley, Solicitor +44 (0)1483 252581

andrew.keeley@charlesrussell.co.uk

As always, the key message is to read your contract and keep accurate records!

Charles Russell LLP is a limited liability partnership registered in England and Wales, registered number OC311850, and is authorised and regulated by the Solicitors Regulation Authority. Any reference to a partner in relation to Charles Russell LLP is to a member of Charles Russell LLP or an employee with equivalent standing and qualifications. A list of members and of non-members who are described as partners, is available for inspection at the registered office, 5 Fleet Place, London EC4M 7RD.