If a consultant’s appointment or a design and build contract contains both fitness for purpose and reasonable skill and care, obligations do both apply or can one cancel the other out?
In 2 recent cases, the Court had to decide.
When negotiating the terms of a designer’s appointment, one of the most frequently deployed arguments is that professional indemnity insurance does not cover fitness for purpose. However, many appointments will include obligations that the completed building will meet certain performance criteria. This is not generally unreasonable given that the end user will wish to use the building for a particular purpose.
But what is the position where a designer is obliged to both exercise reasonable skill and care and meet a certain specification? Even if the designer has exercised reasonable skill and care, but the finished product does not meet the performance criteria, can the designer still be held to account?
These were the questions addressed in the cases of Costain Limited v Charles Haswell & Partners Ltd and MT Hojgaard A/S v E.ON Climate and Renewables.
In both cases, the Court held that the two obligations are not necessarily inconsistent. In Costain, the Judge commented that it is not unusual for consultants to warrant that they will carry out their obligations with reasonable skill and care; equally “…it is perfectly normal…to give express warranties which impose strict liability or a performance obligation…”.
Similarly, in the E.ON case, the Judge said: “it is not uncommon for construction and engineering contracts to contain obligations both to exercise reasonable skill and care…and to achieve a particular result…The two obligations are not mutually incompatible…”.
In the E.ON case, the contractor had exercised reasonable skill and care in constructing foundations for off-shore wind turbine generators, and had followed an internationally recognised design standard. But, because of an unknown error in the design standard, the finished product did not meet the required 20 year lifetime warranty. The contractor was therefore found to be in breach of this strict liability requirement. However, the case is going to the Court of Appeal.
The message is that it is not unreasonable for end users to insist that the completed works will meet certain performance criteria relevant to the intended use. However, such criteria should be clearly defined and referenced because if they are not met, the fact that the consultant has exercised reasonable skill and care will afford no defence.
