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This month’s contract clinic question comes from a contractor who was constructing an office building when Storm Henk struck, causing significant damage to the half-built facility. Paul Gibbons and Richard O’Brien explain how this is handled by standard contracts and insurance policies.


The answer


This fundamentally comes down to several key questions. First, what does your contract say? Second, would any insurance policies respond to it? Also, could the damage have been reasonably predicted, what damage has arisen, and what steps had (or should have) been taken to mitigate against the damage?


Under standard contracts, there are a few things that tend to come up. Your contract will need to be reviewed to identify what circumstances exist in each. The likelihood is that the contract will allow an extension of time for relevant issues. You may also be entitled to money, depending upon what the contract says.

Examples of clauses that may help include:

  • Exceptionally adverse weather. Would the conditions that led to the damage be reasonably classed as exceptionally adverse? This is slightly subjective, but the conditions would need to lie outside ‘average’ expected conditions.
  • Damage caused by ‘specified perils’. In this case, you may need to see if an exceptional storm or similar event is mentioned as a ‘specified peril’ in the contract.
  • Force majeure. This again, can be a little subjective, and will be subject to a test around whether the incident or weather could have been foreseen. A common example of force majeure debated in recent years was the Covid-19 pandemic. Before the pandemic, some argued that it was so exceptional that no one could have predicted such an event. Yet it would be hard to argue now that a pandemic is unforeseeable.

You can read the full article here. Should you need help with a similar problem, please don’t hesitate to get in contact with us today.