There seems to have been a flurry of interest in these columns and elsewhere in the concept of “force majeure” in construction contracts. As has happened before, this was undoubtedly spurred by Adrian Williamson QC’s paper presented to the Society of Construction Law in February 2012. This is another column triggered by reading his paper.
It reminded me that when I was an articled clerk (before the days of trainees) I was asked to research the meaning of force majeure in English law. I must have got it right because like Adrian Williamson, I concluded that there was no concept of force majeure in English common law, which only recognised the concept of “frustration” - the site disappearing and such like - and there was no commonly understood definition of force majeure unless it was defined in the contract itself. Adrian’s paper reaches a similar conclusion so not much has changed there.
Some employers and a number of their advisers do not act fairly but see macho contractor-bashing as part of their skills set
Very naively, I then remember asking why, in that case, the grounds for extensions of time under JCT forms included force majeure without a definition. It was explained to me that the architect - in those days masters of all JCT contracts - needed to have a provision enabling them to relieve the contractor of an onerous liability for liquidated and ascertained damages when it was fair to do so. It didn’t really matter what force majeure meant but, when the architect thought it was in the best interests of the project and reaching satisfactory agreement on the final account, he or she could give an extension on that ground but on the basis that the contractor would not recover loss and/or expense. So that the risk was effectively shared.
But things have changed dramatically - no longer do architects administer the majority of major contracts in a benign and paternalistic way. Their role has been usurped by project managers, quantity surveyors and so on. Similarly, as Adrian states, it would be a bold contractor who sought an extension of time under a JCT contract for force majeure given uncertainty as to its meaning. He also notes that the fact that there are no reported cases on the JCT form suggests that there may not have been many takers. The construction industry - perhaps sadly - is much more aware these days of legal issues and a contract administrator will apply the contract strictly, leaving little room for doing what is fair, in order to avoid a negligence claim for wrongfully granting extensions of time.
It is now left to the discretion of employers as to whether they enforce liquidated and ascertained damages in circumstances where the contract may not expressly permit extensions of time for what has happened but where it might morally be “fair” to relieve the contractor of onerous liabilities. Of course, some employers and a number of their advisers do not act fairly but see macho contractor-bashing as part of their skills set. Even those who may be inclined to be fair may find themselves constrained by the terms of their funding arrangements, agreements with tenants and so on.
So should the concept of force majeure be included in construction contracts? There seems little point in continuing with the JCT approach since that seems to be benefitting no one. If it is to be included, it should be on the basis that there is a proper definition of what constitutes force majeure. Fire, flood, strikes and lock-outs are already expressly included but it is really the completely left field event which causes the problem.
And that is not likely to be at the front of the minds of most of those drafting standard form contracts. Major fires that shut down tube lines; meteors landing on the site; Transport for London shutting major flyovers or preventing access to specific areas of London for construction traffic; flu epidemics and so on.
So should the JCT introduce a proper force majeure clause? The difficulty with much of the drafting (for example, the old ICE conditions which provided for “other special circumstances of any kind whatsoever which may occur”) is the difficulty of predicting how they will be interpreted in a particular case - does this include subcontractor insolvency or not? Does it include the site manager falling under a bus? This sort of uncertainty is not much liked by the industry these days …
Should the JCT go as far as the NEC and allow the contractor to recover their costs as well in these circumstances? Despite exhortations not to amend the NEC, this seems to be a step too far for most users who do delete this.
So, we will probably find that nothing much changes and another new generation of trainees will be asked to research this point - and if they are, the short-cut answer is in Adrian’s paper.
Ann Minogue is a construction partner in solicitor Ashurst
08 June 2012
05 April 2012
5 March 2012
04 March 2011