The duties of a contractor carrying out ‘design’ are defined by the scope of work, as well as express and implied contract terms, statute and professional obligations.
However, this is a changing area of law and it can be difficult to identify the scope of the design obligations given that the relevant standard does not always depend solely on how the contract terms are drafted.
When reviewing design obligations and potential risk, it is important to distinguish between the different duties in respect of goods and materials; and services and design.
Goods and materials
Generally speaking, the starting point is that a contractor supplying goods or materials is obliged to supply items that are reasonably fit for their intended purpose. Details will be set out in the contract terms or may be implied by statute. Employers often introduce further wording regarding unacceptable or hazardous materials.
Services
The contract will usually specify the standard of workmanship but if not, the works are to be carried out with proper skill and care. This is expressed in JCT contracts as carrying out the works in a “proper and workmanlike manner”.
Design
The two most common duties of a designer are:
- reasonable skill and care: the designer is to act in accordance with the usual practice and professional standards at the time that the design was carried out in order to discharge their duty; and
- fitness for purpose: an absolute obligation to achieve a specified result or outcome. This imposes a higher standard than reasonable skill and care and may not be insurable under professional indemnity (PI) insurance policies.
For a party carrying out design, unless the scope of their obligation is expressly confirmed to be exercising the duties of a designer exercising the appropriate degree of skill and care – which is sometimes expressed as the same standard as an ‘architect’ or ‘professional’ – they could be held to the higher fitness for purpose standard. This is because English law imposes a fitness for purpose obligation where a non-professional is undertaking a professional activity.
Even where the obligation is to use reasonable skill and care, it can be necessary to specifically disclaim specialist expertise and to tell a client if they need to seek specialist advice elsewhere. In the fire safety context, the case of LDC v George Downing European confirmed that a strict obligation to comply with statutory requirements, including building regulations, is not superseded by a reasonable skill and care obligation.
Fitness for purpose
Employers can sometimes favour fitness for purpose obligations. These can be achieved not just through express terms, but also through performance requirements. Case law confirms that even where there is ‘reasonable skill and care’ wording in a contract, a competing provision can impose a ‘fitness for purpose’ responsibility. That happened in the MT Højgaard case. There, the contractor found itself responsible for design defects due to wording ‘tucked away’ in a technical document, even though it had met its obligations around reasonable skill and care and complied with relevant industry codes.
NEC contracts impose a fitness for purpose obligation unless the “reasonable skill and care” Option X15 is selected. In any event, the works information/scope should still be checked to see if fitness for purpose obligations are imposed in respect of any aspects of design.
Capturing design obligations
Clauses or requirements introduced at contract negotiation stage which can carry additional risks for contractors carrying out design include:
- confirmation that the contractor takes responsibility for any design contained within employer design documents, such as the employer’s requirements in JCT contracts;
- lack of time or money remedies for design errors – even if these are in documents not produced by the contractor – or discrepancies between the contractor’s design and any higher standards in the employer’s design;
- amendments to wording that the skill and care of an architect or professional designer is to be exercised. The standard of a “building contractor” is a higher standard denoting fitness for purpose, as explained above; and
- fitness for purpose obligations and lifecycle guarantees hidden in the employer’s requirements or technical specification documents – despite a ‘skill and care’ obligation in the contract terms, as was the position in the MT Højgaard case.
Managing risk
It is possible to manage design risk if contracts and accompanying documentation are carefully reviewed to understand the liabilities to which the parties are signing up and if the design process is monitored through to completion.
Practical tips for managing common pitfalls include:
- checking that the contract confirms that the design liability standard is reasonable skill and care;
- avoiding fitness for purpose by the backdoor – carefully check specification requirements and technical documents as well as the contract terms;
- considering the ability to pass obligations down the contractual line – for example, to design consultants or sub-contractors – and recourse to any novated design team where accepting responsibility for employer design;
- understanding PI insurance policy requirements and what can and cannot be claimed; and
- following the ‘golden thread’ approach when undertaking design and construction activities, which will help ensure that the design and as-built condition is clear and documented.
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