Design professionals beware

Design professionals must take extreme care in agreeing the terms of professional obligations, states Guy Lane, partner at the law firm BLM.

Natasha Levanti
05 November 2015

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Recent court judgments have highlighted the significant level of care that consultants need to take in reviewing contractual documentation to ensure that the level of risk assumed does not outstrip either the scope of the professional matters within their control or what would be covered by most standard professional indemnity policies.

As  Guy Lane, partner at the law firm BLM said: “Extreme care must be taken in agreeing obligations.  It can be very difficult when contractors seek to pass on absolute obligations, but they must resisted.  Fitness for purpose obligations are generally excluded from PI cover and liabilities arising from other absolute obligations may not be covered.    If PI cover does not respond, the consultant will have to meet the cost from its own pocket.”

Consulting engineers frequently seek to limit their professional obligations to the exercise of reasonable skill and care, thus steering clear of ‘fitness for purpose’ or absolute performance obligations. They may not have full control over the achievement of an absolute obligation, such as “the foundations must achieve a service life of 20 years”, or it could incline them to act in a way inconsistent with their reasonable skill and obligation.

"Fitness for purpose obligations are generally excluded from PI cover and liabilities arising from other absolute obligations may not be covered.    If PI cover does not respond, the consultant will have to meet the cost from its own pocket" - Guy Lane, BLM

Lane sparked a lively debate at a London event recently among ACE members, where he revealed the significant and potentially costly risk of getting this wrong, particularly on larger projects with more elaborate specifications and standards. 

Lane focused in on the recent cases of Hojgaard and Haase Environmental Consulting in which the court had to engage in a detailed interpretation exercise in order to establish whether the contract did indeed impose a fitness for purpose obligation. 

These court judgements, and the processes taken to reach them are prime examples of why care must be taken when reviewing the level of risk assumed within the contractual documentation.

ACE's Legal Director, Dwight Patten, said "these decisions have been an eye opener for the consultants in attendance.  We expect further debate at our next legal update in Manchester on 10 November."