Clients and contractors should be clear about responsibility for standards and specifications, lawyers have warned.
Commercial law firm Moore Blatch said contracts should make it clear who is ultimately responsible for all specifications and standards in a project.
The law firm’s warning follows a recent Court of Appeal ruling in a case between MT Højgaard and E.On Climate and Renewables, where the contractor, MT Højgaard, was found not liable for the design problems of a wind farm’s foundations caused by defects in an international standard used. The appeal decision reversed an initial ruling in favour of E.On Climate and Renewables last year.
Moore Blatch said the latest ruling was because the contractor’s obligations were defined in relative terms such as complying with 'good industry practice' and using reasonable skill and care, rather than a warranty that the design would work.
The law firm warned that very specific language should be used in contracts, and said when a company is employed to create a technical specification, it is legally liable if the specification is defective due to its negligence or poor performance.
It advised that both parties should sign off technical specifications to limit risk, and a clear distinction should be made between obligations a contractor must comply with in all circumstances, and those where it must only exercise “reasonable skill and care”.
Any requirement for a warranty by the client should be expressly stated. Contractors should state expressly that they will not be responsible for any deficiencies in third party specifications and standards they are working to so that they are not liable for any remedial actions and costs. If there is more than one contractual document, a clear hierarchy between the competing documents should be set out, the law firm said.
John Warchus, partner at Moore Blatch, said: “The court ruling also means that anyone commissioning work must make sure that their brief is explicit, and where they are calling on a contractor to supply a deliverable, this must be carefully and explicitly worded as an absolute obligation.”