Don't get caught by foot and mouth

As the crisis precipitated by the outbreak of foot-and-mouth disease shows few signs of lessening, its effect will be felt increasingly in construction projects in the countryside. Indeed, it is already the case that contractors and employers have been forced to suspend work because they could not get access to a site. How do the standard building and engineering contracts cope with this event, if at all? Obviously, the foot-and-mouth outbreak is beyond the control of either party to the contract. Usually, an event such as this would qualify as a "force majeure", an occurrence such as war or floods that affects the performance of the contract and is beyond the control of either party.

There is no standard definition of a force majeure in English law. In view of this, the standard contracts have taken it on themselves to produce their own definitions, and some are more limited than others. PFI contracts, for example, employ an extremely limited definition of force majeure – it covers only those events that are uninsurable, reflecting the intention to allocate as many risks as possible to the private party.

The usual effect of force majeure will be to allow an extension of time and/or compensation for losses incurred by the party applying (usually the contractor). Some contracts specify that if the event continues for a certain period of time (say, 180 days) the contract is terminated.

This issue has been discussed before in the legal pages of Building. "Clash points" on 29 September 2000 (page 54) looked at how the recent fuel crisis would be dealt with under the JCT forms. Consequently, it may be more useful here to examine other standard forms to see how they deal with force majeure.

Under the terms of the ICE Conditions of Contract, the contractor will not be found to be liable for loss or damage to the extent that it is due to those matters set out in clause 20(2), subsections (a) to (f). These include radioactivity, civil war, rebellion and revolution and pressure waves from aircraft – but no mention is made of a specific exclusion caused by an epidemic or similar event.

The new GC/Works contract deals with delaying events that are neither the responsibility of the contractor or the employer (clause 36). This clause states that the project manager can award an extension of time in response to an event that could delay either the completion of part or all of the construction programme. Again, the clause goes on to detail several specific matters that are generally viewed as being force majeure.

However, at clause 36 (e), a catch-all clause has been added allowing an extension to be awarded by the project manager if "any other circumstances [arise] which are outside the control of the contractor or any of his subcontractors which could not have been reasonably contemplated under the contract". Arguably, foot and mouth would be one such event, and an extension of time may be allowed.

The NEC deals with the matter in a wholly different way. This contract refers to such matters as "employer's risks" in clause 8. The items specifically referred to in the contract documents do not clearly refer to instances such as the one in discussion here; instead, they focus on war, civil riot and rebellion, radioactivity and so on.

However, there is provision within the contract to add further risks within this section under "contract data" and this should be reviewed to ensure no overbearing catch-all liability has been imposed on the employer, or to consider whether an occurrence such as this should be included.

It will always be necessary, of course, to consider the scope of your insurance in these circumstances and to review the precise terms of cover. Whatever the position, as the previous summary indicates, unless there is a catch-all clause available or the force majeure provision is sufficiently wide, care will have to be taken to see whether the present outbreak is adequately covered in the contract.

In addition, if you are considering entering into a contract, take a moment to review its provisions in this regard to ensure that you are happy with the ambit of the force majeure provisions.