Often, on a construction project, the contractor and some of its sub-contractors will be involved in producing and developing the design and will have ‘design liability’. Parties with design liability may, however, be required to exercise different standards of care in relation to the design—some may be subject to an absolute obligation to ensure the completed design is fit for purpose, whereas others may merely be required to exercise reasonable skill and care.
Where the contractor has assumed responsibility for design (e.g. where there is a Contractor’s Designed Portion, or the procurement route is design and build), the standard of care to be exercised in relation to that design can be more onerous than that required of a design consultant.
As the contractor is the supplier of the materials/goods to construct the works, case law has developed to provide that, in the absence of express terms in the contract to the contrary, there is an implied obligation that the design will be fit for the intended purpose.
This means that the contractor is obliged to deliver a completed project that is fit for purpose without distinction between its obligations in relation to materials, workmanship or design.
Contractors that are responsible for design are likely to want to avoid a fitness for purpose requirement in respect of that design, and will therefore wish to include an express requirement to exercise reasonable skill and care in respect of the design.
To establish that a contractor has failed to exercise reasonable skill and care, it is not sufficient just to show that the contractor has failed to comply, to the letter, with its appointment, i.e. it has not achieved perfection in the performance of its duties—negligence on the part of the contractor must be demonstrated.
The test will be whether the contractor has met 'the standard of the ordinary skilled man exercising and professing to have that special skill', i.e. if a contractor acts in accordance with the standards of reasonably competent members of its profession at that time, it will not be negligent.
It is common, however, to amend these reasonable skill and care requirements in schedules of amendments to building contracts. Employers generally prefer to enhance the standard of care in the same way as they would in a consultant’s appointment—often by requiring the contractor to exercise the reasonable skill and care as would be expected of an architect/other consultant experienced in providing services of a project of a similar size, nature, complexity etc. as the employer’s project.
If a contractor has special knowledge, it will be expected to exercise a degree of care in relation to that special knowledge and the reasonable skill and care that it is required to exercise will be measured against that special knowledge and not against the lesser knowledge of the ordinary competent contractor.
As already mentioned, where a contractor has design responsibility on construction projects, the implied term of fitness for purpose will apply unless the contract expressly states otherwise. This means that the contractor will be liable if the completed project is not fit for its intended purpose, irrespective of whether the unfitness resulted from the quality of the works or materials, or the design.
While a requirement to ensure that works are fit for purpose imposes a significant obligation on a contractor, and is included in many construction contracts, there is little authority on how achievement of this standard should be measured.
If the design is not fit for purpose, then the contractor will be liable to pay damages for breach of contract regardless of whether the contractor has been negligent. This is more onerous than the duty to use reasonable skill and care.
Where a contractor has design responsibility, to avoid the contractor being subject to a fitness for purpose obligation for both the design and construction of the works, there must be clear words to separate the different standards in relation to the design of the works and the construction.
The contractor must review a contract carefully to ensure that the standard of care that it wishes to accept and which its professional indemnity insurance permits it to accept is, in fact, what the contract imposes on it.
Where a contractor has design responsibility on construction projects, the implied term of fitness for purpose will apply unless the contract expressly states otherwise. This means that the contractor will be liable if the completed project is not fit for its intended purpose, irrespective of whether the unfitness resulted from the quality of the works or materials, or the design.
The expression 'Employer’s Requirements' (ERs) is used in contracts to describe the document(s) produced by the employer to set out its requirements in relation to the project (including performance specifications, drawings, initial designs etc) and this is what the design and construction of the works will be based on.
The ERs can contain anything from an outline statement of performance requirements (typical for a design and build project) to a very well developed design (typical in traditional procurement) so it is important that responsibility for this area of design is clearly defined.
Until 2002, in CIS v Henry Boot [2002] EWHC 1270 (TCC), it was generally presumed that the contractor would not be responsible for design contained in the ERs unless the contract expressly said that it was. However, the court held that Henry Boot’s obligation to complete the design by producing drawings to develop the consultant’s conceptual design into a completed design capable of construction meant that it must examine the design when taking over responsibility, assess the assumptions that it is based on and form an opinion as to whether those assumptions are correct.
The contractor should, therefore, ensure that it does not inadvertently take on responsibility for design done by or on behalf of the employer, which it does not intend to be responsible for, or for other elements of the ERs. If a contractor accepts this type of provision, it will be responsible for examining the design and verifying all the statements and assumptions in the ERs and making sure everything is correct.
To clarify the position, the contractor should seek to include a provision which makes it clear that the contractor has no responsibility for the ERs or for verifying the adequacy of any design contained in them.
Contractors must be careful to ensure that, if they are, in general, not responsible for design but they are producing a few detail and/or working drawings, they are clear about what their responsibility is with regard to the designs in the ERs which these drawings will be based on and, if necessary, take this into account in their price.
Without an expressed definition for design life, the courts will seek to distinguish anticipated maintenance and major repair—ie design life was the assumed period for which a component may be used with anticipated maintenance, but without requiring major repair.
In Blackpool Borough Council v Volkerfitzpatrick [2020] EWHC 1523 (TCC) it was considered that the difference between anticipated maintenance and major repair would in each case be a question of fact and degree. In that case, the terms of the contract led the court to find that anticipated maintenance was limited to maintenance that was not ‘non-standard’ or ‘unusually onerous’, having regard to works of a similar character.
There is no general ‘duty to warn’ in law, but in certain circumstances, a ‘duty to warn’ may be implied into contracts. An implied duty to warn will extend the duties of the contractor/sub-contractor beyond what is expressly set out in their contract and require it to tell its employer of any inadequacies or flaws in the design produced or in the works being carried out by others even though it has no contractual obligation to do so.
In Plant Construction v Clive Adams Associates 69 ConLR 106, [1999] All ER (D) 1471, it was found that the fact that the design of the works concerned was dangerous, and the sub-contractor knew that it was, meant that the sub-contractor had failed to perform its contract by not warning of the defect.
The extent of the duty to warn, and what will need to be done to properly discharge that duty, will depend on the facts of the individual case. In Plant v Clive Adams, the court made clear that, in a case where there was potential danger as a result of errors in the design, giving rise to possible risk to health and/or safety, the sub-contractor should have protested ‘vigorously’, even walking off site, if its warnings were not listened to and the design altered so that it was safe.
It can be a problematic area for contractors and sub-contractors to judge what is required of them because both whether they have a duty to warn, and what they must do to discharge that duty, can depend on the facts and particular circumstances in question. However, there is some comfort for them in the fact that the courts have shown that they will not be quick to impose a duty to warn.
If, on considering designs produced, or works carried out, by others, a contractor/sub-contractor identifies any inadequacies or flaws in them, case law suggests that it would be prudent for them to tell their employer. In particular, if the identified error creates a risk of personal injury or damage to property, the concerned party should make sure it raises its concerns in strenuous terms and, possibly, if the potential risk is serious enough, refuse to continue to work until the issue is properly addressed.
