Liam McMonagle: Do your contracts cover you for disruption?

Liam McMonagle, partner at law firm Thorntons

Liam McMonagle, partner at law firm Thorntons

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As someone who lives in Fife and spends a lot of time working in Edinburgh, life has got a bit tricky lately with the sudden closure of the Forth Road Bridge. I’ve seen parts of Clackmannanshire in the last few days I didn’t know existed. 

As lawyers, we need to consider the implications of this for our clients and their transactions.

The Forth Road Bridge closure could create 'fertile ground for disputes', says Liam McMonagle. Picture: Andrew Milligan/PA Wire

The Forth Road Bridge closure could create 'fertile ground for disputes', says Liam McMonagle. Picture: Andrew Milligan/PA Wire

Most contracts involve a supplier doing something and a customer who pays the supplier for goods or services. The supplier will usually have to do it either by a specified date, or within a reasonable time. Timing is often fundamental and, if so, the contract may set out critical dates and legal remedies if deadlines are missed.    

What happens in cases of extreme disruption will depend on how the contract is worded. If there is a general “force majeure” clause, then this may absolve a supplier for events which prevent performance of the contract which are outside the supplier’s reasonable control. 

Clearly the closure of the Forth Road Bridge would not be something any organisation could do much about and is outside almost everyone’s “reasonable control”. Most contracts, however, are not worded quite as generously as that.

Usually, a supplier will have to take steps to mitigate the effect of the event and use a certain level of effort to work around it. Suppliers of business-critical services might well be expected to operate business continuity and contingency planning to provide continuity even in cases of serious travel disruption, power outages, extreme weather, terrorism or other events and the supplier might need to invoke these before any general “force majeure” clause kicks in. 

This creates fertile ground for disputes. There is ready scope for disagreement over what is reasonable mitigation of an event, whether or not contingency planning should cover specific happenings, and to what degree the cost of doing so should be borne by one party or shared. The Road Haulage Association is estimating that the added fuel costs alone for the diversion route to the next upstream bridges over the Forth will be £600,000 per day so there are significant sums involved here. 

It’s not just business that is affected. Employees will usually have contracted hours during which they are expected to be present at, and available for, work. Some businesses will be able to operate flexible, remote or multi-locational working which could offset the effects of the bridge closure. However, that’s not realistic for many workers. Plenty will have discovered that their normally manageable commute to work has suddenly become unwieldy. Adding a lengthy morning and evening commute to a working day might not be workable for parents with childcare arrangements or other responsibilities. 

Employees caught in that situation are not extensively protected by the law. The general position is that it is the employee’s responsibility to get to work on time. If not, they will probably not be entitled to payment. Some employers will operate adverse weather or business continuity policies and have established procedures for dealing with employees who cannot make it to work. These may allow employees to use untaken holidays at short notice or to work from other locations, but many will require unpaid leave to be taken.   

Best wishes for Christmas and a good New Year (especially if you are a steel girder holding up a bridge).

• Liam McMonagle is a partner in the intellectual property, technology and media team at Thorntons and is qualified in Scots and English law

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