Due to modern drafting trends, it's getting harder to work out whether a designer’s liability for its design is limited to the designer using reasonable skill and care, or whether the designer’s duty is the higher one of ‘fitness for purpose’. The more onerous terms are usually found where there is a design and build contractor or a specialist subcontractor, and bespoke contract terms are being used. Fitness for purpose for design is not usually insurable under professional indemnity policies.
Reasonable skill and care
In the absence of any express contractual terms to the contrary, the law implies through Section 13 of the Supply of Goods and Services Act 1982, that a designer has to provide its services using ‘reasonable skill and care’. If a professional fails to do so and causes its client a loss, then it would be liable in tort and contract; the designer would have been negligent and the client would be entitled to be compensated for its loss.
If the service provided involves a special amount of competence or skill, then the standard the designer has to use is the standard of reasonable skill and care, not that an ordinary person in the street would expected to use, but, rather:
‘It is sufficient if he/she exercises the ordinary skill of an ordinary competent man/woman exercising that particular art.’
This is known as the ‘Bolam test’. Therefore, a designer would have to reach the standard of skill and care that one of its peers should use. If the designer did so, it would evade any liability arising from its design in tort or contract law, notwithstanding that the design may fail and the client may be left with something that does not work.
Fitness for purpose
There are exceptions to the above rule. If statute, such as the Defective Premises Act 1972, requires for any residential premises to be ‘fit for habitation’ then the design, as with other aspects of the build, has to be done so that this outcome is achieved, irrespective of whether the designer has used reasonable skill and care. Therefore, this statute creates a fitness for purpose obligation for all the workmanship going into the project, including design.
Please bear in mind that the Sale of Goods Act 1979 creates a fitness for purpose obligation on the commercial supplier in respect of materials, so any, say, bricks have to be of satisfactory quality and be fit for purpose. This is different from workmanship or design.
Goods supplied are impliedly warranted to be fit for their purpose and can have very significant effects in the context of a construction contract where the contractor is also a designer. This is illustrated by the case of IBA v EMI and BICC . In this case the contractor designed and built a tall brick television mast. The mast failed and it transpired that the bricks the contractor supplied were prone to disproportionate damage on the side facing north. The Court of Appeal had to decide if the bricks specified and supplied by the contractor came with a fitness for purpose warranty, or whether liability arising from the use of the bricks depended on whether the contractor had used reasonable skill and care. This quote sums up the Court’s view:
“We see no good reason for not importing an obligation as to reasonable fitness for purpose into these contracts, or for importing a different obligation in relation to design from the obligation which plainly exists in relation to materials.”
In other words, the liability for design was subject to the reasonable skill and care test, but the supply of the materials (goods) was caught by the usual fitness for purpose warranty. This may seem unfair on a contractor over a consultant, as the consultant’s role is only going to be subject to reasonable skill and care and the contractor ends up with fitness for purpose, but this is not so; it is the merchant’s duty to supply goods that are good to use for the obvious or stated purpose that was held to be unfettered by the fact that the merchant was also designing.
More recently, in the case of MT Hojgaard a/s v E.ON Climate Renewables UK Robin Rigg, the contractor undertook to design and supply foundations for off shore wind turbines that would last 20 years or more. The internationally approved and used specification turned out to be defective and, therefore, the contractor had used reasonable skill and care when designing the foundations. Put simply, the express undertaking to design and install foundations that would last 20 years trumped any implied terms as to reasonable skill and care.
It is because express terms for fitness for purpose and performance specifications are common and not always easily recognisable that bespoke building contracts, and even amendments to standard form building contracts, need to be examined carefully to prevent a contractor finding out it is holding ‘a pig in a poke’ without being able to point to an exculpatory reasonable skill and care proviso.