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Doing something about the weather

It is a general principle, going back at least to United States v. Spearin (1918), that “where one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused or become entitled to additional compensation, because unforeseen difficulties are encountered.”

For example, if a contractor were to agree to build a house for a fixed price, the contractor in general assumes the risk of unexpected conditions like stony ground, high fuel prices and bad weather.

A contractor can address the risk of “unforeseen difficulties” by adding a contingency amount into its bid for the work. The contingency amount is set by experience so that the cost of dealing with bad conditions on one project is offset by the low cost of dealing with good conditions on another. This approach spreads the risk of bad luck over all of the contractor’s projects.

To avoid paying for (some of) the contractor’s unforeseen difficulties, a project owner may write the contract to address specific risks such as unexpected soil conditions, rising prices or bad weather, or may include a general “force majeure” clause that is triggered by unforeseen difficulties. Such clauses are intended to provide bidders relief in the case of (at least some) unexpected difficulties and thus minimize bid contingencies.

Weather clauses are particularly difficult to write because the effect of weather on work is variable. If a contractor is compacting soil or finishing concrete, heavy rains are a concern. If a contractor is setting wind turbine towers, high winds are a concern. If a contractor is building a structure, there are no weather concerns once it is enclosed (though heavy snow may impede access to the site).

Weather clauses typically contain two parts: 1, a definition of what counts as unexpected bad weather, often defined by comparing conditions measured at some local weather station (larger projects in remote areas may have temporary weather stations on site) and historical weather norms, and 2, a requirement that weather conditions have some documented effect on construction operations (e.g., high winds prevented crane work). These clauses need to be tailored to particular projects.

Without a specific weather clause, a contractor may encounter difficulty collecting even for very bad weather. In Donald B. Murphy Contractors, Inc. v. State of Washington (1985), Murphy was building new sections of Interstate 90 through a hilly area. The work included installation of temporary culverts to handle runoff in a nearby creek.

During construction, heavy rain and melting snow led to “the highest volume ever recorded” in the creek. One culvert that Murphy had installed was washed out by the pressure. The contract apparently included no general force majeure clause and no specific weather clause. Murphy creatively, but unsuccessfully, pursued claims based on other theories.

First, Murphy argued that the owner breached its implied warranty of design because Murphy had installed the culvert according to the plans and specifications and it proved insufficient to handle the actual volume of water during the storm. The court rejected this argument, pointing out that the owner’s implied warranty is limited to the adequacy of the design for expected conditions, not unprecedented storm volumes.

Second, Murphy argued that the stormwater volume was a “changed site condition.” The court agreed that the stormwater volume was unanticipated but (in effect) denied that it was a site condition. Instead, the court regarded the storm as an “act of God” that damaged temporary work, a matter for which the contractor was responsible.

Third, Murphy tried to evade the effect of a “no damages for delay” clause in the contract, but the court enforced the clause. (There is a Washington statute barring enforcement of certain “no damages for delay” clauses, but it does not apply to “act of God” cases.)

Finally, Murphy tried to show that state officials had promised full reimbursement for the flood effects. The court rejected this argument because Murphy never proved that the state officials had authority to modify the contract.

As attributed to Mark Twain, “Everybody talks about the weather, but nobody does anything about it.” In fact, owners and contractors have a chance to do something about the weather when they write their contracts.

Karl Oles is an attorney in the construction and design practice group of Stoel Rives LLP. Contact him at 206-386-7535 or at kfoles@stoel.com.

About Karl Oles