Contract Terms: ‘Specified Perils’

The JCT suite of contracts identifies a number of events known as ‘Specified Perils’ that might cause damage, for example fire, lightning, explosions and floods, which are outside the coverage of indemnities provided by the supply chain. In the event a Specified Peril occurs, the standard position under JCT is that the supply chain has no liability for delay but cannot recover their costs from the client, and the client has no liability to the supply chain but cannot recover delay damages. However, it has become increasingly common to include provisions that remove the supply chain’s immunity from liability for delays where the Specified Peril was caused by them, shifting the balance of risk unevenly in favour of clients. Build UK recommends that the standard JCT position is followed and parties do not include provisions which state that Specified Perils will not give rise to an extension of time where caused by the contractor/sub‐contractor.

Specified Perils is one of six terms covered in Build UK’s recommendation on contract terms designed to encourage a fairer allocation of risk between clients and the supply chain. We have published guidance explaining why each term should be avoided and setting out ways to manage the underlying issues more effectively. The recommendation is non‐binding and Build UK members are free to negotiate their own contractual terms.