The Designer may be held responsible based on the foreseeable consequence of the negligent advice, and the damages incurred as a result. However, it is possible to exclude liability for the accuracy of the information in the Service Agreement in the case that the Employer is acting as a consumer.
August 14, 2019 | 2 minutes read
In the construction industry, the Service Agreement is used for the appointment of consultants, including the Architect, Engineer, Project Manager, and the like, for a project.
Unsurprisingly, the scope of services and duties under a typical Service Agreement should be well defined to minimise liability for both the Designer and the Employer. In particular, Service Agreements intend to address the distribution of the standard of care owed by the service provider. The common practice is to limit liability for the Designer to the exercise of reasonable skill and care. This will help to ensure coverage under the Designer’s Professional Indemnity Insurance (PII) but it may not address the Employer’s vision for risk transfer for the procurement approach intended for the project. PII is typically required for design professionals to safeguard against liability for damages from claims of negligent acts, errors or omissions on the part of the Designer, and in any case, it should be noted that the Designer is entitled to certain rights in non-residential construction projects (in England & Wales).
With Service Agreements, the Designer can be held responsible for offering negligent advice or for creating an impractical design. The Designer may be liable for negligent advice when the advice is relied upon to make a decision. The Designer may then be held responsible based on the foreseeable consequence of the negligent advice, and the damages incurred as a result. However, it is possible to exclude liability for the accuracy of the information in the Service Agreement in the case that the Employer is acting as a consumer. In England & Wales, this is possible if the requirement of ‘reasonableness’ is satisfied under the Unfair Contract Terms Act 1977 or the Unfair Terms in Consumer Contracts Regulations 1999.
Alternatively, the Designer may owe a duty of care to produce a design capable of being built. The work needs to be designed at a level that can be accomplished through the exercising of ordinary skill and care by the Contractor; that the design is fit for the intended purpose.
If the Service Agreement is for the purpose of non-residential construction projects, the Designer is entitled to certain rights under the Housing Grants, Construction and Regeneration Act 1996.
January 25, 2021The NEC4 suite is generally easier to read than the GC21, for instance, and therefore it is more accessible to a wider portion of the project team members. A significant benefit however is that risks are distributed more in the contractor’s favour, more so than what is typically the case with Australian forms...
READ MORE
January 22, 2021The Contractor should be aware that the notification provisions of the NEC Contract require the Contractor to inform the Project Manager for events that may result in additional time and/or money within a specified time frame. Failure to notify in accordance with these provisions will jeopardise the Contractor’s entitlement to additional time and/or money even if the Contractor is not at fault and the Employer is responsible for such an event.
READ MORE