Extreme weather: beyond the force majeure clause - How changing weather conditions will drive commercial disputes, and what you can do to prepare

Introduction

Each year we experience more extreme weather. 2026's northern hemisphere summer featured persistent heatwaves, droughts, and fires. Other regions saw heavy rain, and floods.

Scientists are predicting the 2026-2027 El Niño event will build to a "super El Niño". It could bring more than three degrees of equatorial Pacific sea surface warming¹, and a stormy autumn in north western Europe, including the UK². More heatwaves are expected in 2027.

Weather is a disruptor of commercial activity. Managing its impacts is an increasingly prominent aspect of economic life.

The World Economic Forum's 2026 Global Risks Report survey ranked extreme weather events as the most severe long term (10 year) risk³. Searching the UK Financial Conduct Authority's depository for "extreme weather" in annual financial reports shows a clear trend. Fewer than 200 "hits" arise in 2020, but over 700 hits are recorded annually from 2022⁴.

The Financial Times reported in August 2026 that European businesses are increasingly flagging weather impacts, with "terms related to extreme heat, drought and wildfires […] mentioned on a record share of earnings calls in recent weeks — one in 10 — for European companies with more than $1bn in market value, according to data from AlphaSense"⁵.

The UK's Climate Change Committee said in May 2026: "The UK was built for a climate that no longer exists today and will be increasingly distant in years to come"⁶.

The legal angle

Most legal commentary on the contractual implications of disruptive weather starts with the force majeure clause – a term enabling contract parties to suspend obligations if an in-scope event affects their ability to perform. Other commentary relates to the weather specific wording in standard construction contracts.

This isn’t wrong. It's the obvious place to start if you are affected by weather. You review your contract to see if it provides relief from breach of your obligations. Are weather events in scope? How severe must they be to qualify? Must the event be "unforeseeable" to attract relief? What qualifies as "unforeseeable" when disruptive weather is ever more … foreseeable?

In the 2026 English case of ADM Industries Centers Ltd v Inerco Trade SA [2026] EWHC 1873 (Comm) the court interpreted the word "unforeseeable" in a force majeure clause as meaning an event "whose probability appears, when the contract is concluded, to be so remotely likely to occur and affect its performance that it can be described as "negligible" … "so small that in commercial terms it could be disregarded". It added "The risk of a given event is sometimes a matter of degree: bad weather may be foreseeable, but three days of hurricanes may not be".

In the 2024 English case of Sherman v Reader Offers [2024] EWCA Civ 412, when a tour operator tried to rely upon a force majeure clause following disruption to a package cruise as a result of unusual ice conditions, it was found that although conditions were unusual, they were not unforeseeable. The Court observed that “ironically, it was the very unforeseeability of ice conditions which was itself foreseeable.” This was based on expert evidence that the relevant conditions were highly variable, and "annual patterns that were once considered reliable are now very much less reliable". In other words, uncertainty was to be expected.

But if climate change is increasing the number and intensity of extreme weather events so that they can be expected more frequently and to be more disruptive when they occur, it will have a broader impact on commercial disputes than merely contributing to case law on force majeure clauses (which may not be engaged) and weather specific provisions.

This article considers how this might happen, and what you can do to prepare.

We consider this mostly from the English common law perspective, noting features of other legal systems, where relevant.

What do we mean by "extreme weather"?

The word "extreme" has various connotations. Here, we mean "exceeding what is usual or reasonable to expect". That itself raises a question: can weather be "extreme" if its patterns are no longer unusual? A better term may be "disruptive weather".

While we are starting to see what disruptive weather looks like, the Intergovernmental Panel on Climate Change's 2021 Sixth Assessment Report provides a chastening list. It includes high temperature, heavy precipitation, pluvial (surface water) and river floods, drought, storms (including cyclones, hurricanes and other winds), and compound events (fire weather, and compound flooding – flooding from multiple events, like rainfall and storm surges)⁷.

Impact on business

This list evokes a flooded factory, or wildfire ravaged warehouse. But these are just immediate impacts of weather. To assess the impact of these events it is helpful to consider tiers of impact:

• Primary impacts: your operations are directly affected (for example, your data centre cannot access water from drought-affected sources; your employees can't perform in the heat, and must stop⁸; your premises are destroyed in a wildfire or typhoon). A classic force majeure claim most obviously arises here.
• Secondary impacts: weather events affect your supply chain, or your power supply fails. Critical infrastructure like road or rail transport is affected. You are no longer able to insure your business. Your employees' exposure to extreme heat triggers regulatory investigations, and reputational harm.
• Tertiary impacts: disruptive weather impacts the economy you operate in. It triggers inflation, as costs increase and resources are in short supply. Government measures to mitigate economic harm affect public finances, having knock-on economic impacts, as do weather-inspired displacements of populations.

These tiers show how weather-related effects can take different forms, cascading through supply chains, and the economy.

How could contract law respond?

Freedom of contract characterises English contract law. A court, or arbitration tribunal, will strive to uphold the parties' bargain. These attractively bold statements carry caveats. First, there are a number of common law and statutory exceptions to freedom of contract. Second, upholding the parties' bargain requires the court to determine what that bargain was.

Interpretation

English law contract interpretation means ascertaining what a document would mean to a reasonable person, using the reasonably available background at the date of the contract. How might the test be applied to contracts affected by disruptive weather?

Would a reasonable person be considered to have known of the risk of weather disruption, favouring a more flexible reading of the contract, on the basis that the reasonably available background includes the risk of performance being disrupted by weather? Or would a court or tribunal go in the other direction, and hold the parties strictly to their bargain. If the parties knew about disruptive weather risk, they could have catered expressly for this in the contract. That they did not would favour a less flexible reading.

You can see how arguments could be made from each perspective. The passage of time between the date of the contract and the weather event will be relevant. A contract made when disruptive weather was less common may be interpreted differently to a more recent one.

Implication

Contracts contain terms expressly recorded by the parties - and implied terms. English law implies terms in various circumstances. A term is implied "in fact" if it is necessary to give business efficacy to a contract.

The bar is high. An implied term must be so obvious it "goes without saying". Again the viewpoint is from the contract date. A user-friendly test for an implied term asks whether an interfering bystander, coming upon the parties finalising their contract and suggesting they include a term, would meet the response: "oh, of course". This test may be easier to satisfy for weather related terms against a backdrop of climate disruption and any market practice that develops to address it.

Frustration

An adjacent concept to force majeure under English law is frustration⁹. Frustration discharges a contract when something happens which makes performance impossible, or radically different from that contemplated by the parties.

Weather could make performance impossible – think of a contract to renovate a pier washed away in a storm. It could also transform an obligation into something radically different.

Courts have consistently found that a contract made more expensive or onerous is not frustrated. A weather event which fundamentally changes how an obligation is performed might be. An obligation to deliver goods to a particular location, without specifying the method of transport, but reflecting the parties' understanding that river transport would be used, may be radically different if low water levels render that route impassable. The court would have to consider whether the parties contemplated this possibility, or not. As evidence of weather disruption adds up, they may be considered to have done so.

Other doctrines

English law has no standalone hardship doctrine, enabling a court or tribunal to modify a contract to reflect changed circumstances. Some other laws do. The question is often whether the change was unforeseeable, or unpredictable, at the contract date. Recent weather disruption may expand the scope of what is foreseeable or predictable, making claims for hardship more difficult for affected parties.

Express references to weather

Standard construction contracts grant contractors relief if they face "exceptionally adverse weather conditions" (or similar wording). These contracts are supported by definitions and guidance explaining how to apply the provisions. But weather provisions appear in a range of commercial contracts, often without the parties giving much thought to how to apply them.

Material adverse change clauses

Material adverse change (MAC) clauses, which are most commonly seen in M&A transactions (and also financing agreements), allow a party to withdraw from, or renegotiate, a transaction if events occur between signing and completion that materially affect the target's business, financial condition or prospects.

Could a series of weather events constitute a MAC? The answer will depend on the clause's drafting and on any carve-outs included. Many MAC clauses exclude changes arising from general economic circumstances, natural disasters, or "acts of God". Whether disruptive weather falls within such carve-outs, or whether its impact on a particular business is sufficiently specific to fall outside the carve-outs, is likely to be contested. Increasingly common weather phenomena may be harder to characterise as "disasters" in the sense of a sudden event, if the parties had forewarning of their occurrence.

Reasonableness

Contracts often qualify obligations by reference to reasonableness. It is a neat mechanism to avoid prescribing at the contract date what a party must, or must not do, in particular circumstances. Instead, you apply an objective test when the obligation arises.

A contract might allow a party not to perform if "in its opinion, acting reasonably, it is unsafe to perform operations". More sophisticated contracts may add some standard to assess safety, such as by reference to the safe operating window of equipment provided by the original manufacturer. There is currently debate about the safe operating temperature for human operators. The UK, for example, is due to consult on the need for a maximum working temperature¹¹. Health and safety laws and guidance issued by authorities will evolve to reflect conditions, informing the standards applicable to a reasonable assessment.

The frequency of disruptive weather will not affect whether it is reasonable or not to perform at a particular time, but it may mean these provisions are invoked more often.

A similar point concerns modification clauses, allowing a party to propose a contractual variation subject to counterparty consent, not to be unreasonably withheld. A party may argue that its counterparty is unreasonable in failing to consent to a variation necessary given prevailing weather conditions, which have changed since the contract.

Quality and fitness

Contracts usually require goods or services to be of a particular standard. Even if not express, the law may imply this. The Sale of Goods Act 1979 requires that goods are of satisfactory quality. This means meeting the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances. Quality includes fitness for purpose, and safety and durability. The Supply of Goods and Services Act 1982 implies an obligation of reasonable care and skill for services.

A reasonable person is likely to have heightened expectations in a world of more frequent and more disruptive weather events that goods (like machinery or equipment) and services are fit for, and capable of withstanding such events.

In the 2017 UK Supreme Court case of MT Hojgaard A/S v E.ON Climate and Renewables UK Robin Rigg East Ltd a contractor agreed to install foundations with a design life of 20 years. It also had to use due care and diligence and comply with an international design standard. There was an error in the standard, and the foundations failed. The contractor argued that it had no liability as it had complied with the standard.

The Supreme Court disagreed, stating "where two provisions […] impose different or inconsistent standards or requirements, rather than concluding that they are inconsistent, the correct analysis […] is that the more rigorous or demanding of the two standards or requirements must prevail, as the less rigorous can properly be treated as a minimum requirement". The contractor had a duty to identify the need to improve the design to achieve the 20 year design life.

The risks to contractors in a disruptive weather scenario are clear. Relying on standards which have not been updated to reflect changing weather conditions may not satisfy a more general design obligation.

Insurance and insurability

Many commercial contracts require parties to maintain insurance cover, such as for property damage, business interruption or third party liability. These obligations assume cover is available at a reasonable cost. However, that assumption is under pressure as the insurance industry is increasingly impacted by weather events. PERILS, a data provider, has estimated that the initial insurance industry loss for severe convective storms which affected Germany, France, Switzerland and Italy from 13 to 19 July 2026 was EUR 2,186 million¹². Such losses are causing insurers to withdraw cover from weather exposed markets or reprice risk following the rise in disruptive weather events. As a result, in some sectors and locations, certain types of insurance cover are becoming prohibitively expensive or simply unavailable.

This creates contractual difficulties. A party required to maintain "comprehensive" cover may be unable to comply, or may do so only at a cost that fundamentally alters the economics of the contract. Whether this constitutes a breach will depend on the wording of the obligation — a covenant to maintain insurance "as is reasonably available in the market" offers more flexibility than an absolute obligation to insure against specified risks.

More broadly, insurance is integral to contractual risk allocation. A party relying on its counterparty's insurance as a backstop may find that cover is narrower, or subject to higher excesses, than anticipated.

Damages

Breach a contract and your counterparty is entitled to damages. Those damages may be nominal if loss isn't proven. Will disruptive weather make damages calculations less certain?

Under English law the starting point is that damages should place the claimant in the position it would have been if the contract had been properly performed. That necessarily involves looking into a hypothetical future: what would the claimant's financial position have been without the breach?

Disruptive weather means more business uncertainty. Claimants may face challenges to damages claims from defendants alleging that a claimant's profits would have been eroded by weather events (i.e. essentially that profitability expectations should be modified by increased weather variability). An example would be a venue that could not operate in certain months of the year due to extreme heat, at least not without costly adaptations.

Issues of foreseeability also arise. A claimant can only recover damages that are foreseeable (or not too "remote"). This, again, raises questions of what the parties contemplated when they made their contract. Damages are awarded if a loss arises in the "ordinary course of things", or arose from special circumstances known to the defendant.

Claimants may argue that loss which would not have occurred without disruptive weather is loss arising in the ordinary course of things, because such weather is no longer out of the ordinary.

Negligence

Commercial disputes involve claims for breach of contract, but also negligence (amongst other tort claims). Under English law the two can co-exist.

A claim for negligence requires that a defendant owes a duty of care to the claimant, the duty was breached, and the claimant suffered loss. Here, again, reasonableness is relevant. A person who owes a duty of care breaches it if they fail to exercise reasonable care. This is assessed from the perspective of a hypothetical reasonable person.

One nineteenth century authority stated "Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do"¹³. The existence of disruptive weather and its consequences will inform the standard of care required of a defendant. As more activities become susceptible to weather related disruption, the courts will expect the reasonable person providing advice or services in relation to them to take into account weather risks, as a matter of course.

Adaptation and mitigation of loss

As disruptive weather becomes more foreseeable, courts and tribunals may be less sympathetic to parties who have done nothing to prepare. A party that fails to adapt its operations to known weather risks could face allegations that it has not taken reasonable steps to mitigate its loss (or, in a negligence context, that it has fallen below the expected standard of care.)

Parties therefore may wish to include express obligations to maintain and update climate adaptation plans, or to comply with any evolving industry standards on weather resilience. Contracts could also require parties to notify each other of material weather risks affecting performance.

A party which has invested in adaptation measures may be better placed to defend a damages claim, demonstrating that its losses would have occurred regardless of reasonable precautions.

What can you do?

This article highlights how disruptive weather may shape commercial disputes. What can businesses do, armed with this knowledge?

• What's the risk? The cornerstones of commercial life are contracts. Contracts are risk allocation devices. A first step in ensuring that your contracts can help you manage risk is to perform a climate and weather risk assessment of the different tiers of impact before entering into material contracts. Pay particular attention to secondary impacts in supply chains and how risks may move down supply chains. Consider how the changing climate and specific weather events could disrupt performance, and how the risks are distributed between the parties. This could be part of a broader climate scenario analysis.
• How long are you committed? All contracts are susceptible to the issues described above. But long term contracts are particularly at risk. That is because of the potential discrepancy between conditions at the date of the contract (at which point the terms would be objectively interpreted), and those that might prevail at a later date. Give particular attention to these contracts. Long term contracts also need to provide a way to factor in increasing costs caused by weather disruptions, for example through review mechanisms.
• What's reasonable? Where material obligations are subject to reasonableness qualifications, think about what would be reasonable in a weather-disrupted scenario. Does the contract need to contain an "Adverse Weather" or "Weather Disruption" definition to assist the parties in applying a reasonableness qualifier?
• Relief from weather? If a contract contains specific weather-related relief events, think about what the baseline is for assessing if they are engaged. Should relief be available only for conditions unforeseeable at the date of the contract, or more widely? Consider how the impacts of disruptive weather (such as heatwaves) can be evidenced? What data will be used to link temperature records to the contractual impacts and how will that data be monitored?¹⁴
• Force majeure as the mechanism? If a contract doesn't contain specific relief events, pay particular attention to the force majeure clause. Would it cover the disruptive weather events that your organisation may face? Is there a foreseeability qualifier that could prove problematic if you want to rely on the clause?
• Hell or high (flood) water? These clauses are found in some contracts requiring an obligation be performed irrespective of what happens. Consider specifying that particular obligations must be performed even if disruptive weather would affect them, and, if they are not, compensation must be paid.
• Who bears the risk of health and safety measures? Disruptive weather often raises health and safety issues, with extreme heat being a recent focus in Europe. Consider in advance how the costs and implications of health and safety induced disruptions should be borne.
• Is this fit for purpose? Quality and fitness for purpose issues are particularly likely to arise as operating environments change due to weather. Equipment failures might arise as a result of extreme changes in the ambient environment. If you're taking that contractual risk, consider design life and the impact of weather on performance. Factor that into contract pricing, defect rectification mechanisms and risk allocation.
• Dispute resolution mechanism? A court or tribunal applying English law should approach the issues described in this article in the same way. But parties seeking more flexibility of process, and potentially outcome, may prefer arbitration over courts. Arbitration enables the parties to select arbitrators, including individuals with a background in business or a legal system more open to contractual flexibility than England.
• Tipping the balance? Much disruptive weather arises from climate change. Don't think about climate change as a linear process, with each year getting a bit more disruptive than the last. Scientists increasingly focus on tipping points, which, if passed, cause sudden and dramatic changes to the planet's systems, including its weather. Looking at disruptive weather risks through this lens, particularly where long term contracts are involved, provides a more realistic view of the consequences a business may face. You can read more about tipping points risk here: Climate Tipping Points and Managing Risk Through Non Linear Change.

Ashurst Perkins Coie's complex litigation and sustainability teams advise clients on weather related risks, disputes and risk mitigation. Visit here to find out more about our global team, the support we can provide and key contacts.

Authors: Emma Johnson, Partner; Tom Cummins, Senior Counsel; Becky Clissmann, Sustainability Counsel and Catrin Southgate, Senior Associate.