International Journal of Project Management Vol. 17, No. 5, pp.

301±308, 1998
# 1999 Published by Elsevier Science Ltd and IPMA. All rights reserved
Printed in Great Britain
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PII: S0263-7863(98)00046-5

Limitation of design liability for

contractors
H K Gaafar and J G Perry
School of Civil Engineering, The University of Birmingham, Edgbaston, Birmingham, B15 2TT, UK

This paper is based on research into the di€erent levels of design liability which contractors
might be expected to carry. There is a perception within the construction industry that there are
two distinct levels of liability: `reasonable skill and care' and `®tness for purpose'. The paper
shows that this is an oversimpli®cation, partly caused by the lack of legal de®nition of the term
`®tness for purpose'. The paper provides an introduction to the legal background of design liab-
ility and considers some of the problems raised by the diculty of obtaining insurance cover for
`®tness for purpose' liability. Some commonly used forms of contract are then compared in re-
lation to their treatment of design liability and legal analysis and case law are addressed to
demonstrate problems associated with attempts to limit liability to `reasonable skill and care'.
The paper then presents the concept of a spectrum of liability rather than two distinct levels and
considers the extent to which the novel approach adopted in the relatively new Engineering and
Construction Contract is consistent with the concept of a spectrum of liability. The main aim of
the paper, whose authors are not legal practitioners, is to provide enlightenment for project man-
agers and other construction industry professionals in an area where diculties of understanding
are caused by the interaction of legal elements with contractual provisions. A further aim is to
stimulate the industry to move towards the adoption of liability clauses in forms of contract
which are robust in the prevailing legal and insurance contexts. # 1999 Published by Elsevier
Science Ltd and IPMA. All rights reserved
Keywords: liability, design, contractor, skill and care, ®tness for purpose

Introduction The research undertaken for this paper formed part

The key practical issue concerning design liability for
contractors is the question of which level of liability is
preferable, or acceptable, to the parties to engineering
and construction contracts. The choice is perceived to
be between a `®tness for purpose' liability and a
`reasonable skill and care' liability. Research con-
ducted at the University of Birmingham has revealed
that this choice may not be as straightforward as it
seems. The problems identi®ed include:
. the interaction of the various legal elements with
contractual provisions and the consequent diculties
of understanding created for practitioners in the
industry;
. practical problems relating to the insurability of a
`®tness for purpose' liability and of transferring that
liability to design subcontractors;
. uncertainty over whether some standard forms of
contract achieve their desired intent of limiting liab-
ility to `reasonable skill and care';
. di€erences in both principle and detail between com-
monly used standard forms of contract;
. doubts as to whether the term `®tness for purpose' is
precisely de®ned in the English legal system.
of a broader package of research, funded by EPSRC,
into risk allocation in contracts, which was stimulated
by the involvement of one of the authors in the devel-
opment of the New Engineering Contract1 and its sec-
ond Edition The Engineering and Construction
Contract2. Legal advice to the drafters of the NEC/
ECC led to the avoidance of the term `®tness for pur-
pose' and to the eventual adoption of the notion that
the Employer would either de®ne the extent of his
requirements for performance through the Works
Information or would limit the liability through the
choice of an optional clause. The lengthy consider-
ations which led to this policy revealed, at least in
embryonic form, some of the problems subsequently
identi®ed by more rigorous research.
The methods used for the research leading to this
paper included literature review, a questionnaire survey
to contractors and interviews with specialists, including
insurers.
The authors have no legal expertise beyond that
acquired through their professional and academic
interest in project management and construction con-
tracts. They have not attempted, within the paper, to
interpret or challenge the legal judgements and com-
301
Limitation of design liability for contractors: H K Gaafar and J G Perry
mentaries but to present what they regard as the sali-
ent features of the position.
The paper aims to provide enlightenment on the
legal aspects of design liability for the bene®t of pro-
ject managers and other practitioners concerned with
engineering and construction contracts. It starts with
an introduction to the legal background of design liab-
ility and presents a brief discussion of the practical
aspects of design liability based on the questionnaire
completed by contractors. Some commonly used forms
of contract are then compared in relation to their pol-
icy towards design liability and legal comment is intro-
duced to show that their policies, as interpreted from
the wording of relevant clauses, may not carry a high
certainty of being achievable.
The paper then presents the concept that, in prac-
tice, a spectrum of liability rather than two distinct
levels can be deduced from the research. This section
of the paper includes an assessment of the extent to
which the novel approach adopted by the NEC/ECC
®ts the concept of a spectrum of liability.
The two main conclusions of the paper are, ®rstly,
that there is a need for deeper understanding within
the industry of the problems posed by the assumption
that there are two distinct levels of design liability.
Secondly, that the industry should move towards the
adoption in forms of contract of those models of liab-
ility, through appropriately drafted clauses, which are
robust in the prevailing legal and insurance contexts.
Legal background
The level of liability that design responsibility can give
rise to di€ers between contract and tort for the party
holding the responsiblity. It is the same in tort for
both professional designers and contractors but it dif-
fers in contract. In tort, the nature of the designer's
obligation is to exercise `reasonable skill and care' irre-
spective of the nature of the designer's organisation. In
contract, however, the position in law di€ers to some
extent between the professional designer and the con-
tractor designer in respect of implied terms.* A pro-
fessional designer's liability in contract is to exercise
`reasonable skill and care'. He is not taken to warrant
that the result will be achieved (`strict liability'{). If
the result is not achieved, but he has exercised `reason-
able skill and care', he will not be liable.
The contractor designer su€ers risk by reference to
statutory implied terms, under the Sale of Goods Act
1972 and the Supply of Goods and Services Act 1982,
which will impose certain contractual warranties relat-
ing to merchantable quality and ®tness for purpose
irrespective of what the contract says. The statutory
implied terms give rise to risk for the designer contrac-
tor that a contract which is silent on the point will
impose on him `strict liability' for all the obligations
he has undertaken, including his design obligation.
*Terms which the parties have not themselves seen ®t to include
expressly, and so as a general rule the courts will only imply terms
that they feel the parties must, of necessity, have agreed to if they
have thought about it.
{Liability generated from actions or inactions which are not necess-
arily fault-related or negligence-related.
{The courts will imply the term.
302
Express provisions in the contract (which are subject
to the Unfair Contract Terms Act 1977) will a€ect the
nature of the obligation. Such provisions may either
seek to limit the liability to `reasonable skill and care'
or to make explicit a `®tness for purpose' liability.
Examples of these provisions in some commonly used
forms of construction contract are given later in the
paper.
In the absence of express provisions in the contract,
Duncan Wallace, 19703 shows that it is submitted by
the courts that a contractor undertaking to do work
and supply materials impliedly{ undertakes;
`a. to do the work undertaken with care and skill
or, as sometimes expressed, in a workmanlike man-
ner.
b. to use materials of good quality. In the case of
materials described expressly this will mean good of
their expressed kind. (In the case of goods not
described, or not described in sucient detail, it is
submitted that there will be reliance on the contrac-
tor to that extent, and the warranty in (c) below
will apply);
c. that both the work and materials will be
reasonably ®t for the purpose for which they are
required, unless the circumstances of the contract
are such as to exclude any such obligation (this obli-
gation is additional to that in (a) and (b), and only
becomes relevant, for practical purposes, if the con-
tractor has ful®lled his obligations under (a) and
(b)).'
Duncan Wallace, 19703 also explains that the ®rst
two obligations (a) and (b) correspond to the warranty
of merchantability, and that under (c) to the warranty
of suitability, under section 14 of the Sale of Goods
Act 1873. He explains that the obligation under (c) is
here called the `design' obligation and extends to all
defects of planning or conception of the building or
project in question including, as stated, the selection of
all materials and work processes.
Jackson and Powell, 19924 sought to explain this
position by reference to the case of Midland Bank
Trust Co. Ltd. vs. Hett, Stubbs and Kemp (1979)
where they state that Oliver J. pointed out the obli-
gation to exercise `reasonable skill and care' is not the
only contractual term which ought to be considered in
a professional negligence action;
`The classical formulation of the claim in this sort of
case as ``damages for negligence and breach of pro-
fessional duty'' tends to be a mesmeric phrase. It con-
centrates attention on the implied obligation to devote
to the client's business that reasonable care and skill to
be expected from a normally competent and careful
practitioner as if that obligation were not only a com-
pendious, but also an exhaustive, de®nition of all the
duties assumed under the contract created by the retai-
ner and its acceptance. But, of course, it is not. A con-
tract gives rise to a complex of rights and duties of
which the duty to exercise ``reasonable care and skill'' is
but one.
If I employ a carpenter to supply and put up a good
quality oak shelf for me, the acceptance by him of that
employment involves the assumption of a number of
contractual duties. He must supply wood of an ade-
quate quality and it must be oak. He must ®x the shelf.
 Limitation of design liability for contractors: H K Gaafar and J G Perry
And he must carry out the fashioning and ®xing with
the reasonable care and skill which I am entitled to
expect of a skilled craftsman. If he ®xes the brackets
but fails to supply the shelf or if he supplies and ®xes a
shelf of unseasoned pine, my complaint against him is
not that he has failed to exercise reasonable skill and
care in carrying out the work but that he has failed to
supply what was contracted for.'
Jackson and Powell, 19924 conclude, therefore, that
the particular obligations of a carpenter (or a contrac-
tor) to his client are generally of a di€erent nature to
those owed by a professional man to his client.
The above does not state expressly that the contrac-
tor's obligations amount to a `®tness for purpose'
requirement. However, the statement ``. . . my com-
plaint against him is not that he has failed to exercise
`reasonable skill and care' in carrying out the work but
that he has failed to supply what was contracted for''
implies a higher level of liability than `reasonable skill
and care'. The phrase `what was contracted for', inter-
preted in the sense of normal usage of the English
language, suggests that the precise level of liability is
governed by what is stated in the totality of the con-
tract.
Case law has sought to de®ne the level of compe-
tence and the degree of skill and care required.
Whether `reasonable skill and care' has been exercised
is judged by reference to the ordinary level of compe-
tence of a designer operating in that particular ®eld.
The generally accepted expression of the test appears
in Bolam vs. Frien Hospital Management Committee
(1957):
`The test is the standard of the ordinary skilled man
exercising and professing to have that special skill.'
Jackson and Powell, 19924 also state that the stan-
dard of care was originally expressed over 100 years
ago in the case of Lanphier vs Philos (1838),
`Every person who enters into a learned profession
undertakes to bring to the exercise of it a reasonable
degree of care and skill. He does not undertake, if he is
an attorney, that at all events you shall gain your case
nor does a surgeon undertake that he will perform a
cure, nor does he undertake to use the highest possible
degree of skill. There may be persons who have higher
education and greater advantage than he has but he
undertakes to bring a fair, reasonable and competent
degree of skill.'
From this legal background, we ®nd therefore that
in both tort and contract the professional designers
liability amounts to `reasonable skill and care'. We can
also establish that the law has sought to de®ne `reason-
able skill and care'. The position di€ers for contractors
in contract where the lack of express provisions in a
contract limiting their liability to `reasonable skill and
care' will expose them to statutory implied terms.
Their liability then becomes more onerous and it may
be implied that it is a strict `®tness for purpose' liab-
ility. However, the authors have been unable to ®nd a
precise de®nition of the term `®tness for purpose' and
several lawyers have con®rmed in discussion that one
does not exist, at least in the U.K. construction indus-
try, though we sense that the lack of de®nition is also
a wider international problem. It has been found that
the interpretation of `®tness for purpose' is highly
dependent on the facts and circumstances of each par-
ticular case. As will be shown later in the paper, it has
also been found that the extrapolation of the interpret-
ation of speci®c cases to a new situation certainly
appears complex and uncertain to non-lawyers.
Liability limitation in practice
The problems posed by the levels of liability is further
ampli®ed by the industry's needs. It might be expected
that clients would generally prefer contractors to have
a `®tness for purpose' liability. However, research has
revealed that this is not necessarily the case. From a
research sample that included 32 contractors (inclusive
of both interview and survey results where the survey
response rate was 55%), it has been found that the
majority of clients (about 70%) would prefer to
impose a `®tness for purpose' liability. A signi®cant
minority of clients (about 30%) may not necessarily
have this preference. The most likely reason for this
®nding, as evidenced by the research, seems to be that
the latter group probably recognises the practical and
commercial problems posed to contractors by a strict
`®tness for purpose' liability. As the law does not
require professional designers to carry a higher level of
liability than `reasonable skill and care' there is usually
no insurance market o€ering a higher level of cover
for design liability and so neither they nor contractors
are able to obtain it. We understand that occasionally
Professional Indemnity insurers may enter into special
agreements for a higher level of cover with pro-
fessional designers, though this outcome may be an
uncertain one until the precise details of the work to
be covered are known.
Consequently both contractors and professional
designers are unlikely to be able to obtain protection
against a `®tness for purpose' liability. If this level of
liability is placed on contractors they may not be able to
pass it down to professional designers appointed under
a subcontract, thus leaving the contractor carrying a
major uninsured risk. Understandably contractors pre-
fer their liability in these circumstances to be limited to
`reasonable skill and care' and it appears that some cli-
ents recognise that it is expedient to do so.
This problem is not restricted to the design and
build procurement route though that is the area where
the issue and research tended to be focused. In other
methods of procurement there is an increasing trend to
use specialist subcontractors who are required to pro-
vide some design. The same problems arise in these
situations though they may be partially obscured as
the subcontractors may not necessarily be aware of a
higher level of liability in the main contract.
The lack of transparency of the requirements for de-
sign responsibility of subcontractors has been commen-
ted on in a di€erent context by U€ (1991)5 who stated;
`The contractor's design responsibility subject has
always had something of a Cinderella existence, its true
potential and importance being concealed beneath a
droll exterior. Thus, under the well-known JCT forms
of contract, there was often con¯ict between the
Conditions of Contract and actual events, particularly
where design work was undertaken by nominated sub-
contractors.'
303
Limitation of design liability for contractors: H K Gaafar and J G Perry
Other writers have questioned the policy of unlim-
ited design liability of contractors undertaking design
and build contracts, for example, Goudsmit (1990)6
who stated;
`Why should a design and build contractor have a more
extensive liability as to his design work than a pro-
fessional designer? Why should the liabilities resulting
from a design and build contract be greater than those
accumulating under a traditional contract structure?'
Due to the above reasons and maybe others, some
standard forms of contract have introduced clauses
which seek to limit the level of design liability carried
by contractors. However, an important question arises;
do these limitation clauses actually achieve the desired
objective of limiting the contractors' liability to
`reasonable skill and care'?
Liability limitation clauses within forms of contract
The authors have found that liability limitation clauses
within some existing standard forms of contract may
not necessarily serve their purpose of limiting the con-
tractors' liability to `reasonable skill and care'.
As the legal background showed, the strict `®tness
for purpose' liability would be implied in contract (by
Statute) for contractors' design and workmanship.
This would be the case unless it has been expressly lim-
ited within the contract to `reasonable skill and care'.
Some writers have commented about the legal in-
terpretation of such express provisions. For example,
starting with JCT817, Stuart-Ranchev, 19908 shows
that Clause 2.5.1 of JCT81 expressly provides that the
contractor has the ``like liability as would an architect,
or as the case may be, other appropriate designer''. The
same wording is also used in Clause 2.7.1 of the
Contractor's Design Portion Supplement to JCT809.
This may limit the contractor's design to `reasonable
skill and care', but this may not necessarily apply to a
specialist subcontractor supplying design. Stuart-
Ranchev, 19908 comments that, in relation to this
Clause, the Architect's standard terms under the RIBA
Standard Conditions of Appointment expressly exclude
liability in relation to specialist subcontractors' design.
If the Contractor's liability is expressed as the ``like
liability as an architect would [have]'', then the pos-
ition may be di€erent for specialist subcontractors
since the liability is expressly excluded.
Within the ICE Conditions of Contract, 6th
Edition10, the liability is limited through Clause 8(2)
which states,
`The Contractor shall exercise all reasonable skill care
and diligence in designing any part of the Permanent
Works for which he is responsible.'
Whilst the clause states that the contractor is to
exercise `reasonable skill and care' it does not specify
that the end product does not necessarily have to be ®t
for its intended purpose. One interpretation of the
clause may be that the contractor has to exercise
`reasonable skill and care' and also that the structure
may still need to be ®t for its intended purpose. On
the same note, U€ (1991)5 commented that the inten-
tion appears to be to limit the contractor's design
responsibility to one requiring proof of negligence.
But, he also stated that the clauses are not expressed
304
as a limitation of liability. There is apparently nothing
to prevent it being ``expressly provided in the con-
tract'' that the contractor shall design some element of
the works to achieve a particular result.
In commenting about ICE (Design and Construct)
Conditions of Contract11, Capper (1996)12 highlighted
the same risk arising. He stated,
`Whilst it would appear that the intention of the con-
tract craftsman was not to impose the higher standard,
there is some risk that on the wording of the ICE
(Design and Construct) the higher standard is to be
achieved by the Contractor.'
However, Capper (1996)12 went on to explain that
the risk stems from other clauses, for example, Clause
6(2)(a) in the ICE (D and C) which reads as follows;
`The Contractor shall except as may otherwise be pro-
vided in the Contract submit to the Employer's
Representative such designs and drawings as are necess-
ary to show the general arrangement of the Works and
that the Works will comply with the Employer's
Requirements.'
The de®nition of the Employer's Requirements is
contained in Clause 1(1)(e) which reads:
`the requirements which are identi®ed as such at the
date of the award of the Contract and any subsequent
variations thereto and which may describe the standards
performance and/or objectives that are to be achieved
by the Works or part thereof.'
He states that it can readily be seen therefore that
not only are the designs and drawings to be prepared
so as to show that the Works will comply with the
Employer's Requirements but also the Employer's
Requirements themselves import standards, perform-
ance and/or objectives that are to be achieved by the
Works or parts of them.
The ICE Conditions of Contract, 5th Edition13 do
not have a clause limiting the contractor's liability.
The reason presumably was that the contractor was
not expected to have any design duties. Also, GC/
Works/114 does not mention limitation of the level of
design liability for contractors.
Model Form MF/115 does not limit the contractor's
liability in relation to the Works. On the contrary,
Clause 36.9 states,
`The Contractor's liability under this Clause shall be in
lieu of any condition or warranty implied by law as to
the quality or ®tness for any particular purpose . . .'
Similarly, IChemE Red Book16 has Clause 3.3 that
states,
`. . . the Plant as completed by the Contractor shall be
in every respect suitable for the purposes for which it is
intended.'
Bateman (1994)17 commented that the background
to the ICE (D & C) and the IChemE Red Book is
rather di€erent. A civil engineering D & C contractor
would probably employ a consulting engineer to do
the design work. Such a consultant is unable to accept
liability greater than that of `reasonable care and skill'.
The craftsmen of the ICE (D & C) form recognised
that and chose not to leave the contractor carrying a
risk that he could not pass on, and which he was ill-
 Limitation of design liability for contractors: H K Gaafar and J G Perry
Table 1 Limitation clauses within Standard Forms of Contract
Forms with `reasonable skill and care' Silent forms
limitation clauses
JCT81 ICE 5th Edition
ICE 6th Edition GC/Works/1
ICE (Design and Construct) JCT80
Contractors Design Portion Supplement
(JCT80)
equipped to carry himself. In contrast, process engin-
eering contractors often develop their processes in a
research facility and therefore can test and re®ne the
process before marketing it. Such processes are often
the subject of patents etc. and details may be subject
to restrictions (for commercial reasons). That, together
with feed stocks often being of a consistent quality,
leads to a strict `®tness for purpose' liability being
acceptable to the contractor as well as desirable to the
purchaser. The research has not been able to test
whether process contractors are able to insure this risk
or feel the need to do so. Table 1 summarizes the way
in which commonly used standard forms deal with de-
sign liability.
When we consider the ECC, we ®nd that Clause 20
requires compliance of the contractor's design with the
Works Information. The ECC has a level of liability
limitation clause through its Optional Clause M which
states,
`The Contractor is not liable for Defects in the works
due to his design so far as he proves that he used
reasonable skill and care to ensure that it complied with
the Works Information.'
If the Optional Clause is not used, then Clause 20
prevails. The contractor's liability may or may not
then be interpreted as a strict `®tness for purpose' liab-
ility depending on how the Works Information is
drafted. The Works Information may contain some
text which requires a certain level of performance or
function and other information which is in the form of
a detailed speci®cation. The following statement from
Hudson18 suggests that the performance speci®cation
will override in terms of providing the governing level
of liability in these circumstances;
`Where a contractor undertakes ``to carry out work
which will perform a certain duty or function, in con-
formity with plans and speci®cations, and it turns out
that the works constructed in accordance with the plans
and speci®cations will not perform that duty or func-
tion, it would appear that generally the express obli-
gation to construct a work capable of carrying out the
duty in question overrides the obligation to comply
with plans and speci®cations, and the contractor will be
liable for the failure of the work, notwithstanding that
it is carried out in accordance with the plans and speci-
®cations . . .''.'
If this is correct it has implications for a contractor
under any contract which does not limit the liability to
`reasonable skill and care'. Where the speci®cations
include both performance and detailed speci®cations
the contractor should ensure that the latter do not hin-
der his ability to achieve the former.
Forms with a strict `®tness for Forms with optional `reasonable
purpose' requirement clauses skill and care' clause
Model Form MF/1 ECC
IChemE Red Book
Liability spectrum
The e€ects of the ®ndings presented so far in this
paper are ®rstly that the precise level of design liability
for contractors is in¯uenced by a combination of
implied terms (from Statute), the nature of the word-
ing of clauses in contract forms and the manner in
which plans and speci®cations are written for a par-
ticular contract. Secondly, that whilst the concept of
`reasonable skill and care' is amenable to legal de®-
nition, or at least reasonable description, that of `®t-
ness for purpose' is not. Thirdly, that attempts to limit
liability to `reasonable skill and care' may not fully
achieve their objective, thereby introducing uncertainty
into the apparently clear distinction between `reason-
able skill and care' and `®tness for purpose'.
Taken together, these ®ndings appear to the authors
to produce a reality which can be described as a spec-
trum of liability rather than two distinctive levels of
liability. This can be represented diagrammatricallyÐ
see Figure 1.
At one end of the spectrum (boundary d), the con-
tractor will be held liable if the works or part of the
works are not ®t for their intended purpose. That,
however, will be based on the assumption that the cli-
ent has very clearly communicated his requirements
and de®ned his purposes. In this case, the liability may
be due to design, defective workmanship or defective
materials. At boundary `a', the contractor will only be
held liable if it was proved that he was negligent.
Legally, these two boundaries may be perceived as
easy to de®ne. However, in practice, the particular
wording of the contract clauses and design speci®ca-
tions may place the actual liability somewhere in the
spectrum between the two extremes. For example,
i. The case of Greaves (Contractors) Ltd. vs.
Baynham Meikle and Partners (1975) was a com-
plex one which went to the Court of Appeal. The
original judgement was that Baynham Meikle were
liable for providing a design of a warehouse which
was not `®t for purpose' in terms of withstanding vi-
bration from fork lift trucks. The Court of Appeal
upheld the original judgement but stated that
Baynham Meikle had no greater duty than `reason-
able skill and care'. However it was also stated that
what the original judge meant was that in the cir-
cumstances of the case special steps were required
to discharge the duty to exercise `reasonable skill
and care' and that those steps had not been taken
and if they had been the design would have been `®t
for purpose'.
In e€ect the case reinforces the view that a pro-
fessional designer has a liability which is `reasonable
skill and care'. However the judgement that special
steps were needed to exercise `reasonable skill and
305
Limitation of design liability for contractors: H K Gaafar and J G Perry
Figure 1 Liability spectrum
care' implies that there is a spectrum of such liability
between `a' and `b' and that, in such circumstances
`reasonable skill and care' may equate to `®tness for
purpose'.
ii. compliance with the plans and speci®cations
may have ensured a `®t for purpose' completed
works but in actual fact inadequacy of information
supplied by clients caused the problem, for example,
the case of Stormont Main Working Men's Club
and Institute Ltd. vs. J. Roscoe Milne Partnership
(1988). This case signi®es the importance of convey-
ance of information about the intended purpose to
the designer. In this case, the architect, who was
particularly experienced in designing working men's
clubs (including snooker facilities), was sued by his
client when it became apparent that there was insuf-
®cient space for competition play. The judge found
that,
`the expectations of the client, so far as the architect
can be expected to be aware of them, are relevant when
considering the duty of the architect to seek clari®cation
of his brief and also that the architect has a duty to
exercise due care to ensure that the design should be
reasonably e€ective to achieve the client's purpose, so
that if the client has expressed his instructions in terms
which leave the architect in doubt as to what the pur-
pose is, the architect has a duty to ascertain what is the
purpose he is instructed to achieve.'
The judge however decided that this was not the
case here and that it was reasonable for the architect
to assume only recreational purposes were required. In
this case, a spectrum was produced between `a' and `b'
but the liability laid with the client. Again `®tness for
purpose' may have been achieved by the architect if
adequate information was supplied in the speci®cations
or if the architect considered the possibility of compe-
tition play and sought clari®cation. Clients, therefore,
still have a responsibility towards communication of
306
the purpose and adequacy of the plans and speci®ca-
tions and they remain of paramount importance.
iii. boundary `c' may occur anywhere between `b'
and `d' in cases where higher skill and care may be
interpreted by some practitioners as `reasonable skill
and care', for example the case of George Wimpey
& Co Ltd. vs. D.V. Poole and others (1984). In par-
ticular reference to this case, an important question
was raised by Stuart-Ranchev (1990)8. Does the test
di€er for someone with greater skills than the ordin-
ary man exercising that particular skill? In answer
to this question she states,
`this question was considered in George Wimpey & Co
Limited vs. D.V. Poole and others (1984) where the
judge held that the basic test is no di€erent where the
client deliberately selects and pays for someone with
particularly high skills. This case concerned the curious
scenario of a design and build contractor trying to per-
suade the Court that it had been negligent on the basis
that its special expertise meant it owed a higher duty of
care than ordinary competence. The reason was that
Wimpey had carried out remedial works and were now
claiming under their professional indemnity policy, for
which they had to establish they were negligent. The
judge however held himself bound to follow the Bolam
test which had House of Lords approval (Whitehouse v.
Jordan [1981]) and rejected that Wimpey had been neg-
ligent.'
It appears that the expected level of skill and care
may not be easy to establish. If negligence can easily
be established (boundary `a' in Figure 1), then the
courts can easily establish that `reasonable skill and
care' has not been exercised and therefore the respon-
sible party win be held liable in contract and possibly
in tort. However, as the case of Wimpey demonstrates,
a `no negligence' case may be established but with the
result that a party may be considered, or may consider
himself, negligent. Therefore, a spectrum between `b'
 Limitation of design liability for contractors: H K Gaafar and J G Perry
and `c' may be created where there is potential con-
sideration of negligence. However, if `higher skill and
care' is exercised then a spectrum between `c' and `d' is
created.
iv. A case stated by Stuart-Ranchev (1990)8
shows that a contractor's responsibilities may
extend to `®tness for purpose' in terms of design,
even when the contractor has no direct responsibil-
ity for producing the design. In Brunswick
Construction Ltd. vs. Nowlan and Others (1974),
the contractor entered into a contract with the
plainti€ to build a house in accordance with the
drawings and speci®cations. These had been pre-
pared by an architect employed by the plainti€, but
no architect or engineer was involved beyond the
design stage. Due to a design defect, the completed
house started to leak. The contractor was held liable
to the plainti€ because a company of its experience
should have detected that the design was defective;
the house-owner not having an architect or engineer
to supervise the works must have been taken to
have relied entirely on the skill and attention of the
contractor; and knowing of the reliance based upon
him, the contractor was under a duty to warn; the
contractor's obligation was to carry out work which
would perform the intended function and this over-
rode the obligation to comply with the plans and
speci®cations.
This is perhaps an extreme case, turning on the lack
of professional supervision of construction. However it
demonstrates vividly that assumptions about the level
of liability are dangerous and that circumstances can
move the liability right across the spectrum from `d' to
`a'.
These cases o€er support to the authors' contention
that within the construction industry, a spectrum of
liability, which is discontinuous, is a better represen-
tation of reality than the supposition that there are
two distinct levels. For professional designers, archi-
tects, contractors and professional indemnity insurers,
boundary `a' may be perceived as distinct without the
knowledge that it can be established anywhere between
`a' and `d'. Through more explicit statements, there
may therefore be a need for a more practical under-
standing by managers and engineers of the notion that
`reasonable skill and care' is not distinct. For most
existing forms of contract, no attempt is made to take
this concept of a spectrum into account or to recognise
that it exists. We have seen that most of them attempt
to limit the contractor's liability to either boundary `a'
or `d'.
The exception to this is the ECC. As stated before,
the ECC core Clause 20 requires the contractor's de-
sign to comply with the Works Information. In
essence, this takes into account the existence of a liab-
ility spectrum since the Clause is drafted in a way that
the liability is dependent only on the particulars of the
plans and speci®cations (the Works Information). The
main danger for the contractor would be inadequacy
of information supplied by clients. However, in this
case, the liability would remain with the client unless
the contractor, as a designer, did not exercise `reason-
able skin and care' in seeking adequacy of infor-
mation. The other uncertainty is whether Hudson's
point, referred to earlier in the paper, is correct.
If the ECC Optional Clause M is used, then the in-
terpretation will probably be di€erent from the the in-
terpretation of similar clauses in other contracts in two
ways. Firstly, unlike the ICE, Option M of the ECC
introduces an explicit limitation through the words
``The Contractor is not liable . . .''. If it is not ®t for its
intended purpose and the contractor can demostrate
that he exercised `reasonable skill and care' then he
will not be liable. Secondly, Option M of the ECC
puts the responsibility for proof of negligence on the
contractor. He is the party who has to prove that he
exercised `reasonable skill and care'. Traditionally, the
onus of proof of negligence was on the client to prove
that the contractor did not exercise `reasonable skill
and care'. Abrahamson (1997)19 has commented that;
`Under Option M the employer avoids the diculties of
proving from outside that the contractor's design was
negligent. The contractor has an incentive to ensure
that he (and his subcontractors and sub-consultants) do
their designing with provable care.'
Clause M is a secondary option within the structure
of the NEC/ECC, which means that clients choose
whether to select it or not. This has the advantage of
taking into account the di€ering needs of the industry
as not all clients require a strict `®t for purpose' liab-
ility from their contractors. If Option M is not used
the extent of liability (the position on the spectrum)
becomes highly dependent on the way in which the
Works Information is drafted.
Conclusions
The research has shown that the industry perception
of two distinctive levels of design liability is a major
oversimpli®cation of the legal position. Perhaps the
most notable illustration of this is the lack of legal
de®nition of the widely used term `®tness for purpose'.
A rather more subtle issue, though of considerable
commercial importance, is that legal analysis and case
law show that attempts to limit liability in some forms
of contract may not achieve the desired purpose and
may mislead parties to the contract into a false sense
of security.
These points are well understood by experts in the
legal profession, but it is clear that there is a need for
deeper understanding within the industry of the pro-
blems posed by the assumption that there are two dis-
tinct levels of liability. Perhaps the most evident
practical problem encountered is that of the unavail-
ability or near unavailability of insurance for a `®tness
for purpose' liability. This a€ects contractors (es-
pecially in design and build contracts), specialist sub-
contractors and professional designers, especially when
the latter are appointed under a subcontract to a de-
sign and build contractor.
The authors have presented the concept of a spec-
trum of liability as an aid to understanding the legal
position. An analysis of several common forms of con-
tract yields the view that the ECC is the closest to
accomodating to this spectrum. It has been argued
that through Option M in the ECC, a limitation to
liability is clearly established. If Option M is not used,
the extent to which the contract moves through the
spectrum towards `®tness for purpose' is dependent on
307
Limitation of design liability for contractors: H K Gaafar and J G Perry
the way the Works Information is drafted rather than
relying on a legally unde®ned term.
Many of the existing forms of contract appear not
to be robust, given the prevailing legal and insurance
contexts, in the ways in which they deal with design
liability. The industry should move towards the adop-
tion in forms of contract of models of liability (in
terms of appropriately drafted clauses) which re¯ect
these contexts.
The authors do not pretend that the research has
been exhaustive, for example the particular position of
process plant contractors with respect to `®tness for
purpose' liability has not been pursued. Nevertheless
they hope that the paper has provided some enlighten-
ment on the topic and will stimulate the development
of more robust approaches which avoid the problems
that have been outlined. Participants from the con-
struction industry, the legal profession and the insur-
ance sector will need to work together to achieve this.
Table of cases
. Brunswick Construction Ltd. vs. Nowlan & Others
(1974) 21 BLR 127.
. Greaves & Co. (Contractors) vs. Baynham Meikle
and Partners (1975) Court of Appeal.1.WLR.1095.
. Stormont Main Working Men's Club and Institute
Ltd. vs. J. Roscoe Milne Partnership (1988)
Con.L.R.127.
. George Wimpey & Co. Ltd. vs. D.V. Poole and
others (1984) 24.BLR.58.
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Perry, 1997.
Dr. H. K. Gaafar is a Research
Associate at the School of Civil
Engineering, the University of
Birmingham. He has been in the
School for several years during
which he gained his BEng degree in
civil engineering in 1992 and com-
pleted his PhD. in 1997. He has
been appointed at his current pos-
ition since 1995 undertaking as an
Associate with Prof. J. G. Perry an
EPSRC funded Grant to look into
``Risk Allocations in the New
Engineering Contract''.
Professor John Perry is Head of the
School of Civil Engineering at the
University of Birmingham. He
received his PhD from UMIST in
1985. His research interests cover
several aspects of project manage-
ment including contract strategies,
risk management and the develop-
ment of the New Engineering
Contract for the Institution of Civil
Engineers in the UK.