| Date | 10 December 1997 |
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| Judgment | PSC Freyssinet Ltd -v- Byrne Brothers (Formwork) Ltd, 11 December 1996, 15CLD0924 |
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| The Issue | Implication of terms for fitness for purpose in sub-contracts containing design content. |
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| Implication |
A review of the general canons of construction of contract and rules for the implication of terms. |
printThe case of PSC Freyssinet -v- Byrne Brothers presents an opportunity to discuss implied terms for fitness for purpose. Byrne Brothers (Formwork) Ltd was the sub-contractor employed by Higgs and Hill for the design and construction of two car park structures at Lakeside in Thurrock. Byrne entered into two sub-contracts to enable it to fulfill its obligations. The first was with the Ridd Wood Partnership as consulting engineer. The second was with Freyssinet as sub-contractor to design, supply and fix ducts, anchors and associated reinforcement tensioning and gouting for post-tensioned beams which were to form a part of the structure of the car park. Soon after construction cracking was discovered in the beams and the columns and remedial works were required. Disputes arose concerning the cost of these works and eventually Freyssinet commenced proceedings against Byrne for the cost of remedial works. Against this Byrne counter-claimed sums in excess of £500,000 which they alleged they had incurred as consequence of breaches of contract on the part of Freyssinet. As a preliminary issue the court had to decide what were the respective obligations of the sub-consultant designer and sub-contractor in order to determine the respective liabilities of each party for the cracking to the structure. As far as Freyssinet was concerned Byrne contended that Freyssinet was obliged to design the whole beam and not just the design and installation of post-tensioning hardware in the beam as evidenced in its order. Byrne went on to argue that a term should be implied into the contract that Freyssinet should design the works so that they were reasonably fit for their purpose. Finally Byrne argued that what Freyssinet in fact did went beyond the scope of what it was obliged to do under the contract, as evidenced by the sub-contract order. Byrne argued that it was proper to look at the conduct of the parties, and by looking at this conduct it must be concluded that Freyssinet did in fact design the whole beam. Freyssinet countered these arguments by saying that its obligation was clearly set out in the order. Freyssinet contended that beyond the express terms of the sub-contract order only an implied duty to exercise reasonable skill and care could be imposed. The court gave guidance on the appropriate approach to take in the interpretation of a commercial contract. It also reiterated the circumstances in which terms might be implied into a contract. As to the former, it was stated that the courts would never construe words in a vacuum, and that to a greater or lesser extent depending on the subject matter, they would wish to be informed of what might variously be described as the context, the background, the factual matrix or mischief. This led the court to conclude that Freyssinet did not design the beams. Ridd Wood was lead designer and had the obligation to co-ordinate, and the power to amend, calculations as to forces in the beam without reference to Freyssinet. This background was relevant to the conclusion that Freyssinet had not entered into contractual obligations in respect of the whole of the structural system. As to the implied terms for fitness for purpose the court re-stated the conditions set out by the majority of the Privy Council in BP Refinery -v- Shore of Hastings (1978) where it stated that a term would only be implied into a contract where: · it was reasonable and equitable; · it was necessary to give business efficacy to the contract so that no term would be implied if the contract was effective without it; · it was so obvious that it "goes without saying"; · it was capable of clear expression; and finally · it did not contradict any express term of the contract. Whilst it was arguable that a fitness for purpose term could be implied in relation to the design and installation of specialist hardware, in the nature of the work undertaken by Freyssinet in connection with this contract, it was unreasonable and inequitable in this particular case to do so.
CJ-9744
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