Adverse events that cannot be blamed on the parties can, and do, occur on construction projects. Where the events are predictable (rain, snow, cold weather, etc.), the contractor is usually presumed to have accounted for them in its bid and schedule. No additional time or money will be given.
For major, somewhat unpredictable events (tornado, earthquakes, strikes), often referred to as “acts of God,” there is the force majeure clause. The clause originally was designed to help equalize the harm to the owner and the contractor, but the result usually is that both sides are hurt. The contractor is entitled to a time extension, but not to delay damages. The owner has no right of recovery against the contractor.
A common form of this clause is:
The contractor’s right to proceed shall not be terminated nor the contractor charged with damages under this clause, if:
(1) The delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the contractor. Examples of such causes include (i) acts of God or of the public enemy, (ii) acts of the Government in either its sovereign or contractual capacity, (iii) acts of another contractor in the performance of a contract with the Government, (iv) fires, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising [from the above causes].
—Federal Acquisition Regulations (FAR)
The language refers to something not coming out of the construction itself, and not controllable by the contracting parties. It does not address changed conditions, interference among contractors, or known site conditions.
However, a force majeure event can give rise to issues involving other contract clauses, and the contractor should be alert to this fact. For example, the clause does not cover damage to the construction site, to temporary works, or to the cost of clean-up. It does not change the contractor’s obligation to protect the site, and, if the problem is severe enough, it may cause the owner to terminate the job for convenience. Certainly, a force majeure event will tie in to the time extension clause, and will involve suspension of the work.
One aspect of the clause that has been litigated often is the “unusually severe weather” language. A hurricane or tornado may suffice, but what of a particularly rainy spring, or heavy winter snow? The weather has to be both “severe” and “unusually” so.
Wet weather may not truly be the problem. Instead, rain may highlight a subsurface problem, or the lack of planning by the general contractor to provide for drainage. In one Washington, D.C., case involving subway construction, a construction manager was held liable for allowing one contractor to drain its area into the path of another contractor. A claim for severe weather, by itself, would not have had the same success.
Of course, the terms used to describe a force majeure event vary. Some clauses include not only strikes but also “labor unrest.” Also, the delay involved may cause a near impossibility of performance. One case held that the 1973 oil embargo made it nearly impossible for a fabricator to obtain petroleum-based resin to use in its manufacturing and supply contract.
What is disturbing recently is expansions of the force majeure clause to cover very unrelated events. For example, in one industrial contract, the language reads, in part:
If the contractor shall be delayed by: (i) the combined action of workmen ...(ii) by strikes, lockouts, embargoes, fire, unavoidable casualties, national emergency, unusually severe and adverse weather conditions not reasonably anticipatable; or (iii) by any other causes which the contractor could not reasonably control or circumvent... then the CPM schedule shall be adjusted... [emphasis added]
The underlined language is a potential killer. Delays “by any other causes” do not refer to ones which are “not reasonably anticipatable,” but ones which the contractor could not “reasonably control.” Such delays could apply to acts of the owner, architect, or of other contractors. By burying this phrase in the force majeure clause, the drafter has, in effect, created a hidden “no damages for delay” clause.
If you must confront a clause like this one, try to use it to your advantage. Keep alerted to events that the clause describes, and timely request time extensions for owner interferences, contractor interferences, and other causes. Where a legitimate time extension request is denied, you have helped create the legal foundation for an acceleration claim. At a minimum, where the schedule does get adjusted, then it continues to be useful as a planning tool. Where extant delays are not accounted for, the schedule can become meaningless.
The force majeure clause is litigated often. Was the delay on the critical path? Was the delay truly beyond the contractor’s ability to avoid or control? Was the contractor aware of the potential of such an event at contract signing?
In federal government contracting, the various Boards of Contract Appeal (BCA) have issued hundreds of decisions on all manner of variations on the theme of force majeure.
A review of these cases is always instructive about the strength of any claim. Although the decisions are not binding on state courts, BCA rulings can be influential in letting you know what positions have been ruled on favorably, and for what reason.
Do not ignore the force majeure clause. Do not skip past it when reviewing a contract under the mistaken belief that all “acts of God” will be listed and treated the same way in every contract. Develop good monitoring systems so you can track and document the events that affect your work. Maintain a good progress scheduling program so you can readily react to the impacts of unusual events. And do not ignore the written notice clauses for suspensions, delays, and changes.