What standards of design liability are there?
The contractor may warrant that the completed works, when constructed in accordance with the contractor’s design, will be “fit for their intended purpose(s)”.
If the contractor carries out design but does not give such a warranty, he will be under a liability to carry out his design with “reasonable skill and care”.
What does a “reasonable skill and care” liability mean in practice?
If the employer sues the contractor for defective design, he must prove that “reasonable skill and care” was not used in the design – in other words that the design was negligent.
The test the courts will apply is whether the contractor’s design met the standards of a competent professional designer, an inexact science at the best of times!
It is therefore often impossible to predict the outcome of a contested court case where the judge has to choose between the conflicting opinion evidence of the parties’ experts as to whether the design was prepared with “reasonable skill and care”.
What does a “fitness for purpose” liability mean in practice?
If the employer sues the contractor for defective design, he need only prove that the completed building did not “work”– in other words was not fit for its purpose. For example if the roof of the completed building leaks, the employer need only establish the fact that it does leak – he does not have to establish the path of water penetration or that that the elements of the roof through which the water penetrated were negligently designed.
The absolute nature of this obligation is extremely unattractive to insurers which is why the professional indemnity insurance policies of both consultants and contractors usually do not cover contracts in which the consultant or contractor assumed such a liability.
When will the contractor assume a “fitness for purpose” liability?
Usually under a design and build contract – and almost certainly if the contractor carries out all the design under such a contract.
Where the employer makes known the particular purpose of the work and relies on the contractor’s skill and judgment on the basis that such a duty on the contractor’s part includes carrying out the design necessary to complete the work to that standard.
What standard of design liability does the contractor assume under the standard forms of contract?
Under the JCT and ICE contracts:
• there is an express “reasonable skill and care” liability for the design the contractor carries out; although
• the JCT Major Project Construction Contract does have a “fitness for purpose” option.
Under NEC 3:
• the position is not clear because the contract is silent on this issue;
• there is, however, an option under the contract to limit the contractor’s liability for his design to “reasonable skill and care”; and
• the existence of this option suggests an implied “fitness for purpose” liability when the option is not exercised and the contractor is the designer as well as the builder.
Is the contractor ever under a duty to warn of design defects for which he is not responsible?
The contractor might well be under an implied contractual duty to warn the employer of design defects for which the employer’s consultants are responsible where the contractor:
• believes that there are such defects; or
• should, as an ordinarily competent contractor, suspect that there are such defects.
The contractor does not, however, generally owe a duty of care to a consultant engaged by the employer to guard the consultant from a potential liability to the employer for a defect in his design.
Please note: These key points are only intended to give general guidance and are no substitute for specific legal advice on any given situation.