Here’s a question. Why does a JCT Design and Build Contract (between an Employer and a Contractor) refer to the contractor in relation to any design being require to use the level of skill and care expected of a designer? A contractor is not a designer. Why does it not say the contractor should use the level of reasonable skill and care of a contractor when carrying out the design?
The issue of the scope of the duty to design is important for all contractors and sub-contractors as this issue goes to whether a party is signing up to a fitness for purpose obligation. The reason this is so important is if you do sign up to such a provision, it could invalidate your professional indemnity insurance, so if you have a claim against you relating to the design you will not be protected.
What the law has decided, albeit this distinction increasingly in the current market defies logic, is that a contractor when it carries out design as part of the works (which almost always is the case nowadays) is effectively guaranteeing the works (product) are fit for purpose. The law considers a designer carrying out the same design, is only required to use reasonable skill and care and does not guarantee the design is fit for purpose.
How can this be when they are both doing exactly the same thing? It is basically because the law is out of date, but as it stands the law considers a contractor is delivering an overall product – a building or other installation. If you have a product provided to you (for example a kettle) you expect it to be fit for its purpose and will not be satisfied if the designer of the kettle turns round and says “well I know it doesn’t work but I designed it with reasonable skill and care”.
The case of Independent Broadcasting Authority v EMI Electronics Ltd and BICC Construction Ltd (the telephone mast case) is the current law. The Court of Appeal stated:
“We see no good reason… for not importing an obligation as to reasonable fitness for purpose into these contracts or for importing a different obligation in relation to design from the obligation which plainly exists in relation to materials.”
The IBA case was decided in 1980, when the same prevalence of design and build contracts didn’t exist as it does today. However, for now it remains that unless the contract is clear that the scope of the contractor’s duty of design is that of a designer, a contractor will be saddled with a fitness for purpose obligation. He will be effectively taking on a strict liability. This is why JCT has the wording it does – to make sure a contractor does not do so.
The Practical Issue
The key as a contractor or sub-contractor carrying out any design is to make sure your duty is limited to that of a designer. However, an unamended JCT contract (or sub-contract) is not the norm and some parties still try to amend the design obligation to refer back to a contractor. If you are asked to sign such a clause you need to reject it explaining why.
A classic example is as follows:
“…. in respect of the design of the Works, use the standard of skill, care and diligence to carry out and complete the design to be reasonably expected from a properly qualified professional contractorexperienced in providing the design of the Works similar in size, scope and complexity to the Works ….”
More common still is that this type of wording creeps into collateral warranties or third party rights’ schedules often as the draftsperson doesn’t understand the law – not surprising as it is illogical.
Ultimately it’s in no one’s interests to get this wrong – including the employer because if they push for a fitness for purpose obligation they might wish they hadn’t when the contractor goes bust and the insurer disclaims liability.So in a nutshell, it’s important to ensure your contracts, collateral warranties or similar refer to a designer. And here’s the sell: if you need assistance, we are experts at this. Whether you’re an employer, contractor, sub-contractor, or an actual designer (!) we can help. Get in touch here
Author: Andrew Rush