The issue of who is liable under a contract is often a complex one and being aware of whose design is being built can have cost critical implications. Barrister, Professor Rudi Klein warns that design liability could be taken on unwittingly.
A recent case
Whenever there is an allegation that poor design was responsible for defects or even personal injury the net of potential defendants is cast far and wide. A good example is the recent case of Cleightonhills v Bembridge Marine Ltd & Others (2013).
A young employee suffered a serious brain injury as a result of an accident at a boating yard. He sued his employer who repaired and maintained boats at the yard. The employer had built a new workshop and warehouse. A feature of the workshop was a walkway floored with a metal grille some four metres above the ground.
Whilst moving a boat the employee had been standing on the grille which came loose from the supporting beam. He fell to the ground with the grille falling on his head. The employer had to pay over £7 million in damages plus costs. He sought to recover this from the parties involved in the design and construction of the new building. These included the subcontractor responsible for the construction of the walkway, the sub-sub-contractor responsible for fabrication of some of the steel elements and a self-employed draughtsman who prepared fabrication and working drawings.
The claim against these parties was that they were negligent in that they were in breach of a duty of care to the employee to warn that the design of the walkway was deficient. The allegation was that it was under-designed and, therefore, unsuitable for the likely loads that were to be placed on it.
The judge found that all three parties were not in breach of their duty of care. There was nothing in the design specification to suggest that it was deficient. Moreover these defendants were not made aware of the relevant loadings.
The duty to warn
A contractor or subcontractor is expected to act with the skill and care of an ordinarily competent contractor. He is, therefore, expected to warn his other contracting party and/or third parties if the design or the work required to implement it is potentially dangerous. This is so even if the designer knows (or ought to know) that his design – when
implemented – could have harmful consequences.
Completing design commenced by another
It is often the case that a specialist contractor has to complete design work commenced by another. This entails substantial risk. When required to develop or complete someone else’s design the legal position is that you accept responsibility for the whole of the design. To avoid this you will need to consider disclaiming responsibility for the sufficiency or adequacy of the design you have inherited. In law designers do not warrant that their design is feasible.
But what is design?
Often your contract documents will not clearly spell out whether you have any design responsibility. In most cases you will have to search for it. There are a number of clues. Meeting a performance specification involves design. Selecting materials is a design matter. What about this contract clause?:
“The subcontractor shall carry out everything necessary to deliver the required performance under this contract.”
This clause may involve you in design if this is necessary to carry out your work under the contract.
If your contract requires you to carry out design or design development you may be lumbered with a duty to co-ordinate your efforts with other trades. The risk here is that you will be dependent upon their goodwill. They will not have a contract with you enabling you to
enforce any degree of co-ordination.
So why is it important to be aware of possible design liability?
Having responsibility for design could extend your liability far beyond that for workmanship defects. It will also mean that you may have to consider purchasing professional indemnity insurance (assuming you don’t have it already).
Prior to submitting bids make sure that you carefully scrutinise contractual documentation including any proposed warranties. Seek advice if you are unsure whether design responsibility has been included.
Rudi Klein is a barrister and chief executive of the Specialist Engineering Contractors’ Group. He regrets that he is unable to enter into correspondence regarding the content of his columns or the advice he has given. FPDC provides members with free commercial advice as part of their membership and can be contacted on 020 7634 9480 or email@example.com