| Date | 15 February 2006 |
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| Judgment | JCT contracts |
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| The Issue | Under JCT contracts, who is responsible for any design within the Employers’ Requirements? |
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| Implication |
The 2005 editions of the JCT forms seek to make clear that this responsibility rests with the employer. However, the contractor can still retain responsibility if the Employers’ Requirements do not comply with the Statutory Requirements. |
printBack in 2002 Geoff Brewer reported on the case of Cooperative Insurance Society Ltd (CIS) v Henry Boot Scotland Ltd which considered the extent to which a contractor might be liable for deficiencies in any design that is contained within the Employer’s Requirements. Although that particular case concerned a modified JCT contract with a Contractor’s Designed Portion (CDP), the principles established were likely to be applicable wherever a JCT contract required the contractor to undertake design. Depending upon the procurement approach adopted, the employer’s requirements could contain anything between the most outline statement of performance requirements to a fairly well developed design, and so it is important that responsibility for this potentially significant area of design is clearly defined. Until the CIS case, and since the JCT’s first publication of a with contractor’s design form in 1981, it had been thought that the contractor would not be responsible for whatever design may be contained within the employer’s requirements. Most employers have long been aware of the effect of this provision which means that, even under a supposed “design and build” contract, they do not obtain the undoubted benefit of a single point of responsibility (i.e. the contractor) for all matters relating to design and construction. As a consequence a commonly found amendment to the JCT standard forms expressly makes the contractor responsible for the design within the employer’s requirements. Although the question of responsibility for design in the employer’s requirements was not expressly addressed by the JCT contracts, a similar outcome was thought to have been achieved by the wording of clause 2.1.2 of the 1998 edition which required that “The contractor shall … complete the design for the works … so far as not described or stated in the employer’s requirements or contractor’s proposals”. This provision was widely interpreted as setting the employer’s requirements and contractor’s proposals as the starting point for the contractor’s design responsibilities. In CIS v Boot Judge Seymour held that such an interpretation was incorrect, and that in completing the design it was necessary for Boot to examine the design they took over and form an opinion as to the correctness of that design. In effect, the process of completing a design with reasonable skill and care required the contractor to ensure that the whole of the design had been undertaken with reasonable skill and care. This decision upset what had been, for more than 20 years, the commonly understood starting point for the allocation of design responsibility under JCT contracts. The consequences were potentially serious for contractors, the consultants they engage and their insurers as not only did it make their potential liability greater but it also meant that, for many years, they had been approaching their responsibilities on the basis of a fundamental misunderstanding. Who knows how many unidentified errors there were in employer’s requirements that may yet come back to haunt the contractor? The first JCT publication following the decision (the Major Project Form, published in 2003) sought to turn the clock back and maintain the status quo as it was believed to have existed prior to Judge Seymour’s decision. This was achieved through wording that expressly addressed the status of the design in the employer’s requirements by stating “The contractor shall not be responsible for the contents of the requirements or the adequacy of the design contained within the requirements” (clause 5.1). This approach was followed through into the 2005 edition of the Design and Build Contract (DB05) which states “Subject to clause 2.15, the contractor shall not be responsible for the contents of the Employer’s Requirements or for verifying the accuracy of them” (clause 2.11). Similar wording applies in relation to any CDP within the Standard Form of Building Contract (SBC05). Whilst this wording may seem clear and effective, the same was believed of the previous provisions and it will only be when a dispute comes before the courts that the effectiveness, or otherwise, of the new wording will be established. The reference to this provision being subject to clause 2.15 also merits very careful consideration as the effect of clause 2.15 is to require the contractor to comply with the statutory requirements (including, for example, building regulations, bye laws and planning permissions) and, where the employer’s requirements or contractor’s proposals are in conflict with those statutory requirements, to make any amendments or changes necessary, with the consent of the Employer, at its own expense and risk. The only exceptions to this would be where the discrepancy arises as a consequence of changes to statutory requirements after the base date, where the employer has specifically stated that the employer’s requirements comply with the statutory requirements or (optionally) where changes are required as a consequence of planning decisions made after the base date. The risk for contractors of this change of approach is potentially large as, for example, requirement A1 to the Building Regulations 1991 requires that the structure shall be constructed in such a way that all loads are safely transferred to the ground. This requirement would mean that, irrespective of what design may be within the employer’s requirements, the contractor still retains important responsibilities for the structure as whole. In preparing tenders where the contract is to be based on DB05, or where there is a CDP under SBC05, contractors should be very careful to check that the employer’s requirements comply with the statutory requirements. If they do not, then that will need to be allowed for, either financially or by means of a suitably worded qualification within the tender and contract.
CJ-0606
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© Brewer Consulting |
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