Contractors are often required to carry out works in accordance with the specification and industry standards and also meet certain performance criteria.  Those performance criteria be made by reference to design life, such that the completed works are required to achieve a design life of, say, 20 years. 

This was the case in MT Højgaard A/S v E.On Climate and Renewables UK Robin Rigg East Ltd and another [2015] EWCA Civ 407, where MT Højgaard A/S (the contractor) agreed to carry out design, fabrication and installation of the foundations for 60 wind turbine generators in the UK for

E.ON and Robin Rigg.  The contract required that:

The Contractor shall, in accordance with this Agreement, design, manufacture, test, deliver and install and complete the Works:

(i) with due care and diligence expected of appropriately qualified and experienced designers, engineers and constructors (as the case may be)…

(iv) in a professional manner… in accordance with… Good Industry Practice…

(viii) so that the Works, when completed, comply with the requirements of the Agreement…

(x) so that each item of Plant and the Works as a whole shall be fit for its purpose as determined in accordance with the Specification using Good Industry Practice…

(xv) so that the design of the Works and the Works when completed by the Contractor shall be wholly in accordance with this Agreement and shall satisfy any performance specifications or requirements of the Employer as set out in this Agreement..."

The contract further required that the completed wind turbines would have a design life of 20 years. 

The works complied with the specification and with industry standards, but were defective.  Substantial remedial works were required and there was a dispute as to whether the employer or the contractor was liable for the cost. 

The Court of Appeal accepted that the parties may provide in their contract that the contractor must comply with the relevant specifications and standards and in addition must also ensure the works are fit for purpose and that this additional requirement may place obligations on the contractor to go beyond the specification and standards.  However, the wording of this particular contract did not permit such an interpretation. 

  • It say that just because a structure has a design life of 20 years “does not mean that inevitably it will function for 20 years, although it probably will".
  • Whereas some parts of the contract referred to a "lifetime of 20 years" all other references in the contract were to a "design life" of 20 years. The industry standard required a "design life of 20 years".
  • Clause 8.1 of the contract not only failed to impose an absolute obligation of quality, but did "the opposite of requiring an absolute warranty of quality". In particular:
    • clauses 8.1(viii) and (xv) required compliance with the contract and the employer's requirements (including the technical requirements). This was not an absolute obligation for the works. 
    • the fitness for purpose obligation was qualified and thus watered down by the reference to the specification and Good Industry Practice.

This judgment makes clear that there is a need for absolute clarity on the wording of the standard that the contractor is required to achieve.  If it is intended that there are absolution obligations, these should be make clear and distinguished from those that are subject to reasonable skill and care. Perhaps one area of uncertainty relates to the difference between service life and design life. Whilst this was obviously important for the judge, it is not clear why a contractors obligation to achieve a design life of 20 years means that it can avoid liability when the design was clearly defective and the wind farm was not going to achieve 20 years.