Legal commentary: Weathering bad weather

Given the recent bad weather, parties to construction contracts should be aware of what provisions in the standard forms relate to bad weather, flooding and the allocation of risk.

The main suite of JCT contracts detail "exceptionally adverse weather conditions" as a "relevant event" allowing the contractor to claim for an extension of time. The JCT does not offer further clarification as to what will constitute "exceptionally adverse weather", although the word 'exceptionally' suggests that unusually severe weather will be required.

The risk of such weather affecting the progress of the works is effectively shared as while the contractor may claim an extension of time, the contracts do not entitle the contractor to loss and expense caused by any exceptionally adverse weather. Despite this allocation of risk, contractors should be aware that developers will often seek amendments to ensure that the risk of exceptionally adverse weather rests entirely with the contractor.

In contrast, the approach taken in the NEC Contract, as set out in the guidance notes is: "Rather than rely on the subjective generalisations about 'exceptionally inclement weather' a more objective and measurable approach is necessary."

The contract provides for weather data for the site to be compiled and included in the contract. This shows the selected weather conditions for the site of the works for each calendar month with a period of return of more than 10 years. Where no recorded data is available, assumed values are included. Any weather that the weather data shows is likely to occur within a 10-year period is at the contractor's risk in relation to both cost and time. If weather conditions more adverse than these occur, then this is a compensation event that potentially entitles the contractor to both time and money. The test is the comparison of actual weather conditions in any calendar month with the weather data for that month included in the contract.

Insurance provisions

Other provisions to consider are those dealing with insurance. While not mentioning flood damage specifically, NEC3 provides for the contractor to insure in joint names against damage to property and the works, plant, materials and equipment. The contract further provides that any insurance to be taken out by the employer and/or additional policies to be taken out by the contractor should be set out in the contract data. Each party indemnifies the other in respect of matters that are at their risk (with liability to be reduced on a proportional basis if events at the risk of the other party contributed to the event).

Specified peril

In contrast, JCT includes "flood" and "storm" within the definition of "specified peril". Loss or damage occasioned by a specified peril potentially allows the contractor to claim for an extension of time. In addition, the contractor gives an indemnity to the employer in respect of damage to property (excluding work and materials) due to its default or negligence, except where the employer insures under Option C (existing structures) and damage is caused by a specified peril that should be covered by such insurance.

Two recent cases highlight this issue: John F Hunt Demolition Ltd -v- ASME Engineering Ltd and Tyco Fire & Integrated Solutions (UK) Ltd -v- Rolls Royce Motor Cars Ltd and make clear that where the risk of a specified peril is clearly covered by insurance, it is the insurer who must bear the risk, regardless of who is at fault.

Acts of God

Under bespoke forms of contract, it may be possible to argue that flood damage was an "act of god", and not the liability of either party. This was argued in AMF International -v- Magnet Bowling. It was held that regardless of the exceptionally bad weather, the water damage was readily foreseeable and could have been easily guarded against the real cause of the damage was the defendant's failure to perform its contractual obligations to protect the property.

These points should serve as a timely reminder to those entering into construction contracts that weather and its potential consequences is a risk that needs to be properly considered, particularly with winter and (presumably!) more bad weather imminent.

Cerys McRobert, solicitor in the construction team, Boodle Hatfield