Suppliers 'to escape legal penalties'

28 March 2001
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29 March 2001 | Liam O'Brien

Companies whose maintenance and repair contracts are disrupted by government restrictions to counter the food and mouth outbreak are unlikely to get any redress in the courts, according to a supply chain expert.

Force majeure clauses, citing forces beyond a supplier's or client's control, will enable most companies to escape legal action, said Colin Cram, head of the government research councils' Joint Procurement Unit and a member of CIPS's contracts management group.

"For a contract to be binding, it must be possible to perform," Cram said. "If a supplier could genuinely not perform because of the foot and mouth outbreak, I can't see how a case would stand much of a chance."

An increasing number of firms are seeing planned work thrown into disarray. Gas pipeline operator Transco, for instance, has been forced to suspend all routine work in restricted countryside areas because of the disease, which, unlike the last major outbreak in 1967, has spread to all corners of the UK.

"All routine work across roads and into fields in restricted areas has had to be suspended," said a Transco spokesperson. "It is still not clear what the long-term impact will be, but the longer the outbreak continues, the more likely it is that our pipeline projects will be affected."

News of Transco's suspension comes amid reports that work on building sites in many rural areas is also coming to a standstill. Both English Heritage and the National Trust have ordered contractors to stop work or take precautions until further notice.

Roadworks have been disrupted. Work on the £56 million A43 to M40 junction at Towcester, Northamptonshire, has been halted in many places. Among the many civil engineering contractors affected are Gleeson, which has stopped work on schemes in Dartmoor, Oxfordshire and the north of Scotland, and Kennedy Construction, which has had to stop work on two water mains projects in Shrewsbury and Worcester.

The food industry is having to contend with higher costs for many raw materials as restricted access to the countryside forces it to seek supplies from elsewhere in the UK and overseas.

"The situation is probably more serious than we would care to mention," said Michael Carnall, managing director of supply chain consultancy MCC, which advises the food industry. "Producers of convenience foods are already having to put up prices to the retail sector because of their supply situation."

SMmar2001

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