The new reality of extreme weather: is your contract framework fit for purpose?

The wildfires that have swept across parts of Europe over the summer of 2026 are a reminder of a broader trend: weather extremes are becoming more frequent and intense in many regions, creating growing disruption for businesses. In the UK too, five record-breaking heatwaves have caused regions to be hit by wildfires.

From heatwaves, flooding, and storms to droughts and wildfires, organisations across sectors are increasingly exposed to interruptions from weather extremes, with consequences for property, supply chains, infrastructure, workforces, and critical services.

When weather-related disasters occur, for many businesses, the immediate challenge is responding to disruption. However, these events also raise a more fundamental long-term question. Many contractual provisions, including force majeure clauses, business continuity obligations, pricing mechanisms, and sector-specific weather relief provisions, were drafted on the assumption that such events would be relatively rare. As weather-related disruptions becomes more frequent, that assumption may need to be revisited.

Below are five questions businesses should be considering.

 

1. Are your contracts designed to manage disruption?

Historically, many contracts have focused on allocating responsibility once a disruption event has occurred. As resilience to extreme weather increasingly becomes a commercial and legal issue, contracts can also establish clear mechanisms for preparing for and responding to disruption, including requirements to provide early notification of emerging risks, share relevant information, maintain appropriate contingency plans, and set out escalation, decision-making, and coordination arrangements between the parties.

This is particularly important given that many climate-related impacts develop gradually over time rather than arising from a single identifiable incident. Prolonged heatwaves, droughts or recurring weather events may generate cumulative impacts that are more difficult to identify and manage than traditional one-off disruption events.

 

2. Is disruption still "exceptional"?

Many organisations rely on force majeure provisions to manage the legal consequences of events outside a party's control.

There is no universally accepted meaning of force majeure under English law, so the wording of the contract is key. A contract may expressly provide that extreme temperatures are a force majeure event. Where it does not, there may be broader terms that a party might seek to rely on (for example, "act of god", "natural disaster" or general "unforeseeable event" wording). However, such terms are often construed narrowly and are unlikely to be engaged simply by hot weather. A party may need to show that the event was so out of the ordinary that it could not reasonably have been foreseen. As heatwaves become more common, it will be harder to characterise them as unforeseeable.

In addition to determining whether a particular event constitutes force majeure, it's important remember that most force majeure provisions impose additional hurdles before they can be relied upon. By way of example, most clauses require that a party's performance of the contract is "prevented", "hindered" or "delayed" because of the force majeure event. The fact that a contract has simply become more costly to perform does not excuse a party of its contractual obligation.

Businesses should therefore consider whether traditional force majeure provisions remain an adequate mechanism for allocating weather-related risks.

 

3. How exposed is your supply chain to cascading disruption?

The European Environment Agency's first European Climate Risk Assessment (published in 2024) highlighted the growing importance of "cascading risks" that spread through supply chains, infrastructure networks, sectors, and regions. A single extreme weather event can disrupt logistics routes, power supplies, manufacturing facilities, and transport infrastructure simultaneously. For businesses, this means that multiple contractual relationships may be disrupted.

Against this backdrop, businesses should consider mapping critical supply chain dependencies and identifying whether these network effects could affect multiple contracts at the same time.

In this context, contractual resilience is increasingly important. Organisations may wish to assess whether existing contracts contain appropriate provisions relating to:

• business continuity planning;
• contingency arrangements;
• alternative sourcing;
• inventory and buffer stock requirements;
• notification and escalation procedures;
• termination rights where disruption becomes prolonged; and
• other resilience-focused obligations.

Businesses should also review whether contractual liability caps, exclusions and force majeure provisions remain appropriate for scenarios involving widespread or recurring weather-related disruptions.

 

4. Can your pricing mechanisms absorb the costs of recurring disruption?

Extreme weather is measurably increasing the cost of doing business on a number of fronts. The European Central Bank (ECB) has described climate change as an emerging structural driver of food inflation alongside more familiar cost pressures, as droughts, floods, and other extreme weather events increasingly disrupt food production and supply chains. Climate-related risks are also beginning to influence financial markets and lending conditions, which may become relevant to the long-term viability of commercial arrangements.

For example, the ECB has introduced a "climate factor" for certain non-financial corporate bonds used as collateral in Eurosystem refinancing operations and has announced that this approach will be extended to certain non-financial corporate credit claims, including ordinary bank loans, by the end of 2027. These measures are intended to address the financial risks associated with climate transition uncertainty.

Against that backdrop, businesses should review whether existing pricing mechanisms remain fit for purpose. In particular, they should consider whether indexation and price adjustment clauses adequately capture relevant cost increases, whether review periods are sufficiently frequent to reflect rapidly changing market conditions, and whether hardship clauses appropriately address significant climate-driven increases in performance costs. Longer-term contracts warrant particular attention, given that a pricing structure that appeared commercially balanced at signing may no longer reflect the frequency, duration, or severity of disruption experienced during the life of the agreement.

Businesses may find it preferable to address pricing and risk-allocation issues proactively through periodic review mechanisms, objective adjustment triggers, or other contractual tools, rather than waiting for commercial pressures to crystallise into disputes.

 

5. Sector spotlight: are weather-specific contractual mechanisms keeping pace with reality?

Many industries have developed sector-specific contractual mechanisms to deal with weather-related disruption. Construction provides one of the clearest examples.

Standard form construction contracts commonly include provisions that allow relief where works are delayed by exceptionally adverse weather. However, these provisions were generally developed against historical weather patterns that may no longer reflect current conditions.

For example:

JCT contracts provide relief for "exceptionally adverse weather conditions" but do not define the term. Case law suggests that it is the weather itself, rather than the resulting delay, that must be exceptional.

FIDIC (Red and Yellow Books) refer to "exceptionally adverse climatic conditions" that are unforeseeable having regard to climatic data.

NEC adopts a more data-driven approach by comparing actual weather measurements against historical benchmarks, although the prescribed measurements do not specifically capture heatwaves.

Where heat risk is material, parties may want to consider whether to treat extreme heat as a foreseeable project risk, with agreed mechanisms for measuring its effect and allocating the resulting time and cost consequences, rather than depending on force majeure provisions.

There may also be practical challenges in evidencing entitlement. For example, unlike other weather events that cause obvious physical damage (such as flooding or storms), the adverse effect of extreme heat can be harder to evidence. It may be difficult to prove that workers are less productive because of the heat, rather than for other reasons. Given the evidential difficulties, contemporaneous record-keeping is essential. Relevant records may include site temperature data, labour and productivity records, programme updates, site diaries, and visual records showing how the works are affected.

The available remedies can also be limited. Under standard forms, adverse weather may entitle a contractor to additional time but not necessarily additional payment, leaving parties exposed to potentially significant cost consequences.

Notification challenges

Contracts may also have notification requirements. In many standard form construction contracts, a failure to comply with notice requirements can bar a claim. For example, under NEC ECC, a contractor has to notify certain compensation events (including weather) within 8 weeks of becoming aware of the event. Similarly, under FIDIC, a contractor must give notice of a claim within 28 days of becoming aware (or when he should have been aware) of the event giving rise to the claim. Failure to do so will lead to a loss of entitlement.

Where the notice period runs from awareness of the event or its effects, it can be difficult to determine when the contractor knew, or ought reasonably to have known, that the weather was likely to affect performance. This can be a particular issue with heat related delay, the effects of which may be felt gradually over time, rather than at a single, identifiable moment.

Contracts may also contain follow up notices or further particulars once more is known about the effect of the event. There may also be more than one notification requirement for different types of claim. For example, under FIDIC, separate notices may be required for force majeure relief and contractor claims.

 

Conclusion

Many contracts were developed around assumptions that weather-related disruption would be unusual, localised, and short-lived. As those assumptions come under pressure, businesses should review whether their contractual and supply chain arrangements remain fit for purpose.