AKC News // A Review Of How The Law Deals With Responsibility For Design In Construction Projects

Historically, the roles performed by the players in a construction project were clearly defined. The client employed professional consultants, traditionally an architect and/or an engineer, to design the works. He then employed a contractor to build what the consultants had designed. Modern procurement methods, and increasingly complex construction, have made the lines of responsibility far less clear. Design and build procurement, for example, places significant (though, as we will see, not necessary all) design responsibility on the contractor. Construction management projects may apportion design responsibility between the consultants and a number of trade contractors. In those circumstances it is important to be clear where the consultants? design input in trade contract packages ends and where each trade contractor?s design responsibility begins.

Given the increasing use of non-traditional methods of procurement, it is useful to re-visit the subject of design responsibility, to remind ourselves of the extent of the duties which the law imposes upon contractors and consultants responsible for design in the construction process.

The Two Tests
It is important, first, to draw the distinction between the two levels of responsibility relevant in the context of design, namely the duty to exercise reasonable skill and care and the obligation to provide a building which is fit for its purpose.

An obligation upon a designer to exercise reasonable skill and care in undertaking design means that he will only be liable if ?professional negligence? can be demonstrated. Let us take an example of a pile designed by an engineer which has failed. If the applicable test is that of reasonable skill and care, then if the engineer can demonstrate that in designing the pile he used the skill and care which could reasonably be expected of a suitably qualified person undertaking that design, he is not likely to be held to be liable.

If, however, the designer?s duty goes beyond the requirement to use reasonable skill and care, he is effectively guaranteeing that his design will work. The higher, fitness for purpose, test applies as the designer is obliged to produce a design which is fit for the purpose for which it is intended.

Duty of Consultants
It is often assumed that design work undertaken by a consultant will be subject only to the test of reasonable skill and care. This is usually correct; the Court of Appeal held in the case of Hawkins v Chrysler (UK) Limited and Burne Associates (1986) that where a professional man enters a contract to design, no warranty will normally be implied beyond a requirement to use reasonable skill and care in undertaking the design work. However, it is incorrect to assume that a consultant?s design cannot be subject to the fitness for purpose test.

The Court of Appeal, in the earlier case of Greaves & Co (Contractors) Limited v Baynham Meikle & Partners (1975), held that the fitness for purpose test may apply in depending on the facts of the case. Greaves entered into a design and build contract with a client to build a warehouse. They sub-contracted the design for the warehouse to Baynham Meikle, a firm of structural engineers. Baynham Meikle were made fully aware of the purpose of the warehouse, which included the storage on the first floor of oil drums which would be moved and stacked by forklift trucks. Baynham Meikle?s design of the warehouse, however, did not provide for the vibrations caused by the forklift trucks. The result of the vibrations was a failure of the concrete floor. Greaves were found to be liable to their client for this failure, and in turn sued Baynham Meikle for the cost of replacement of the floor.

On the facts of the case, the Court held that Baynham Meikle were negligent and therefore liable, but went on to state that even without negligence on the part of the consultants, they would have been liable, as a fitness for purpose obligation could be implied into their contract with Greaves. The brief accepted by Baynham Meikle was for the design of a warehouse for a particular purpose; it was therefore implied that the design would be fit for the intended purpose, namely a warehouse within which forklift trucks would operate. The Court stressed however, that the question of whether a consultant?s design is subject to the fitness for purpose test will always depend upon the facts of the case.

It is important to remember that an express term in a consultant?s contract will override the position which may otherwise be implied by law. An express reasonable skill and care clause should therefore be a pre-requisite for any consultant. If the parties expressly agree to a clause whereby the consultant warrants that the design will be fit for its purpose, this will be binding. However, such a clause is likely to be of little use to a client. Professional indemnity insurance policies for consultants undertaking design protect the consultant only against a failure to exercise reasonable skill and care. Any fitness for purpose obligation upon the consultants will not traditionally be covered by the policy.

Design and Build Contractors
The Courts have much more readily imposed a fitness for purpose obligation upon contractors who accept a design obligation. In the case of IBA v EMI Electronics Limited and BICC Construction Limited (1978), IBA contracted with EMI for the design and construction of a television mast, and EMI then sub-contracted the works to BICC. The mast subsequently collapsed due to defective design. The House of Lords held that EMI must, at the very least, have warranted that BICC?s design would not be negligent. As it was held to be negligent, EMI were liable to IBA. Their Lordships went on to state that, although it was not necessary in the circumstances to decide on the question of a fitness for purpose obligation having been implied, it is likely that such liability had been imposed upon EMI pursuant to its contract with IBA.

In the EMI case, again the Court was looking at the level of duty which was implied, in that case into a design and build contract, in the absence of express terms. The standard forms of design and build contract do, however, expressly state the extent of the design obligations of the contractor. The JCT Standard Form of Building Contract with Contractor?s Design 1998 Edition states that the contractor shall have, in respect of any design deficiency, the same liabilities to the employer as would an architect or other appropriate and competent designer taking on such design work under a separate contract with the employer. Effectively, this means that contractor?s responsibility for design is limited to the reasonable skill and care test. Similar clauses are to be found in the ICE Design and Construct Contract and the GC/Works/1 contract.

The same principles apply where a contractor is employed to design part of the works only, and the JCT Contractor?s Designed Portion Supplement contains a similar express term limiting the design obligation to reasonable skill and care.

Contractors should be aware of amendments to the express terms of standard forms of building contract which seek to impose a level of responsibility higher than the use of reasonable skill and care. A reference to ?suitability for intended use? for instance is likely to be held to be tantamount to a fitness for purpose obligation. Equally, employers seeking to include such amendments should be aware that their inclusion may prevent a professional indemnity insurance policy, maintained by the contractor for its design obligations, from reacting to a claim.

Construction Management
The nature of construction management procurement means that the detailed design of trade contract packages is often the responsibility of the trade contractor. A key issue to consider in the context of design in construction management is to ensure that the contractual documentation, both for the design consultants and the trade contractor, adequately cover each aspect of design of the package. The consultant?s deed of appointment should set out, in the schedule of services, the extent of his design responsibility. Similarly, the trade contract documentation should expressly provide for the design to be undertaken by the trade contractor.

In the absence of express terms to the contrary, a trade contractor whose works package includes a design element, is likely to have an implied obligation that the works package will be fit for its purpose. It is therefore important, from the trade contractor?s perspective, that an express term is included stating that, to the extent that the trade contractor undertakes any design, it will use the reasonable skill and care to be expected of a suitably qualified professional designer.

As is usually the case, clarity of drafting provides for certainty as to the responsibilities of the parties. The law is likely to imply the fitness for purpose test upon contractors, and perhaps even upon consultants in certain limited circumstances. Express terms as to the extent of design obligations allow the parties more accurately to assess the true design risks.

Date : 26-01-2004