When Do You Have a Fitness for Purpose Obligation?
2
When Does a Design Obligation Become Fitness for Purpose? MW High Tech Projects v Haase 1 reviews whether a consultant’s obligation to use reasonable skill and care can be overridden by express fitness for purpose obligations. MT Højgaard A/S v E.On Climate And Renewables 2 reviews when compliance with a specification imposes a guarantee or fitness for purpose obligation on a contractor High Tech Case: Background The consultant was appointed by a contractor to provide design services, including a specific system for a waste treatment plant. The contractor argued that design changes proposed by the consultant, although meeting the requirements for skill and care, did not comply with two other key contract document – the Output Specification and Delivery Plan. As the wording of the Appointment required reasonable skill and care, and all other obligations were ‘subject to the terms of the Appointment’, this standard took precedence but did not obliterate other obligations. The court analysed the Appointment terms saying: The consultant was obliged to design in accordance with reasonable skill and care, as well as the Output Specification and Delivery Plan. If complying with a part of the Output Specification or Delivery Plan would make the consultant negligent, then the consultant was not obliged to comply with that part. If complying with the Output Specification and Delivery Plan could produce a design that was not negligent, then the consultant was required to use reasonable skill and care to do so. The court said this conclusion was ‘hardly earth-shattering’ as: “It is common for consultants to be under a basic obligation (the duty to exercise reasonable skill and care), but also to be obliged to comply with certain specific documents or requirements.” 3 The consultant could therefore be in breach of contract for failing to provide a design in accordance with the key contract documents. 4 Højgaard Case: Background The foundations of an off-shore wind-farm were found to be defective, despite no negligence on the part of the contractor or designer. The contractor was required under its contract to comply with a specific method of construction, which contained an error. That error meant that the wind-farm as constructed would not fulfil its intended purpose for the intended period - 20 years. The court reviewed the relevant cases on fitness for purpose and said: “It is not unknown for construction contracts to require the contractor (a) to comply with particular specifications and standards and (b) to achieve a particular result. Such a contract, if worded with sufficient clarity, may impose a double obligation upon the contractor. He must as a minimum comply with the relevant specifications and standards. He must also take such further steps as are necessary to ensure that he achieves the specified result. In other words he must ensure that the finished structure conforms with that which he has warranted.” 5
Transcript of When Do You Have a Fitness for Purpose Obligation?
When Does a Design Obligation Become Fitness for Purpose? MW High Tech Projects v Haase1 reviews whether a consultant’s obligation to use reasonable skill
and care can be overridden by express fitness for purpose obligations. MT Højgaard A/S v E.On Climate And Renewables2 reviews when compliance with a specification
imposes a guarantee or fitness for purpose obligation on a contractor
High Tech Case: Background The consultant was appointed by a contractor to provide design services, including a specific system for a waste treatment plant. The contractor argued that design changes proposed by the consultant, although meeting the requirements for skill and care, did not comply with two other key contract document – the Output Specification and Delivery Plan. As the wording of the Appointment required reasonable skill and care, and all other obligations were ‘subject to the terms of the Appointment’, this standard took precedence but did not obliterate other obligations. The court analysed the Appointment terms saying:
The consultant was obliged to design in accordance with reasonable skill and care, as well as the Output Specification and Delivery Plan.
If complying with a part of the Output Specification or Delivery Plan would make the consultant negligent, then the consultant was not obliged to comply with that part.
If complying with the Output Specification and Delivery Plan could produce a design that was not negligent, then the consultant was required to use reasonable skill and care to do so.
The court said this conclusion was ‘hardly earth-shattering’ as: “It is common for consultants to be under a basic obligation (the duty to exercise reasonable skill and care), but also to be obliged to comply with certain specific documents or requirements.”3 The consultant could therefore be in breach of contract for failing to provide a design in accordance with the key contract documents.4
Højgaard Case: Background The foundations of an off-shore wind-farm were found to be defective, despite no negligence on the part of the contractor or designer. The contractor was required under its contract to comply with a specific method of construction, which contained an error. That error meant that the wind-farm as constructed would not fulfil its intended purpose for the intended period - 20 years. The court reviewed the relevant cases on fitness for purpose and said:
“It is not unknown for construction contracts to require the contractor (a) to comply with particular specifications and standards and (b) to achieve a particular result. Such a contract, if worded with sufficient clarity, may impose a double obligation upon the contractor. He must as a minimum comply with the relevant specifications and standards. He must also take such further steps as are necessary to ensure that he achieves the specified result. In other words he must ensure that the finished structure conforms with that which he has warranted.”5
However, the court was confronted ‘with contractual documents of multiple authorship, which contain much loose wording’. It interpreted the contradictory documents to produce an expected, but not guaranteed, life of 20 years.
Conclusion In both cases the court held that to produce a specific performance obligation, the contract had to be worded with utmost clarity.
The Author
Sarah Fox (500 Words Ltd) developed this note. She has trained many construction professionals on why standards of performance and quality must be carefully worded to ensure the project meets its objectives. She is a speaker and trainer who helps construction specialists write simpler contracts and understand complex ones. She is also author of the 500-Word Contract™.
To find out how Sarah can help your contracts meet your required levels of input and ouput, call her mobile: 07767 342747 or email: [email protected]
Footnotes
1 Mw High Tech Projects UK Ltd v Haase Environmental Consulting GmbH [2015] EWHC 152 (TCC). 2 MT Højgaard A/S v E.On Climate And Renewables UK Robin Rigg East Ltd & Anor [2015] EWCA Civ 407 3 Paragraph 52. 4 The judge went on to state that the contractor might not recover damages for such breach where it had
consented to /approved such design changes, waived compliance with supplementary documents, or acquiesced in their progress through constructing the works to those designs.
5 Paragraph 79.
