Fitness for purpose and design liability

Design and fitness for purpose

A contractor or designer can become liable for design in three main ways

1. under the express terms of a contract that he has entered into;
2. by the imposition of a common law term;
3. by the statutory imposition of a term.

There are generally two standards of duty recognizable to contractors which are imposed upon them:

1. the obligation to use reasonable skill and care in relation to design;
2. the obligation to design a product that is fit for its intended purpose.

What we will look at now is:

1. what those standards of duty mean; and
2. which duty is applicable to which scenario and when which duty is likely to be imposed.

Design standards

The obligation to use reasonable skill and care

“Every person who enters into a learned profession undertakes to bring to the exercise of it a reasonable degree of skill and care”

Lamphier v Phipos 1838

A person who holds himself out as being a designer, whether he holds any professional qualifications implies that he is reasonably competent to carry out the task he undertakes.  To be liable therefore the designer must have failed to exercise reasonable skill and care.

What then is reasonable skill and care?  How do you know whether or not you have exercised it?  The failure to exercise reasonable skill and care is analogous to being negligent.

The test was set out in 1856

“Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.”.

Blyth v Birmingham Water Works Co 1856

The difficulty with this test is who is a reasonable man?  A reasonable man used to be the “man on the Clapham omnibus” this person is not suitable to deciding the skills of the relevant professional so, for the purposes of professional negligence the test has been adapted

“Where you get a situation which involves the use of some special skill or competence, then the test whether there has been negligence or not is not the test of the man on top of the Clapham omnibus, because he has not got the special skill.”

Bolam v Friern Hospital management committee

The test of professional men carrying out their professional calling is not judged against non-professional men but against others of their own profession.  It is further judged against the ordinary competent man in the profession

The test of professional men carrying out their professional calling is not judged against non-professional men but against others of their own profession.  It is further judged against the ordinary competent man in the profession.

“A man need not possess the highest expert skill at the risk of being found negligent.  It is well established law that it is sufficient if he exercised the ordinary skill of an ordinary competent man exercising that particular art.”

This sets out a test basically you don’t have to be perfect but you do need to live up to the standards of your profession.  You look at what an ordinary competent designer exercising reasonable care would do and compare that with the actions of the person against which the negligence is alleged.  In practice that involves getting expert testimony from other designers on the allegation.  It is very easy when something goes wrong to assume that it must be someone’s fault but this is not necessarily the case, your designer does not have to be perfect.

“A professional man… must bring to any professional task he undertakes no less expertise, skill and care than other ordinarily competent members would bring but need bring no more.  The law does not require of a professional man that he be a paragon combining the qualities of polymath and prophet.”

What you have therefore when you have a contract obligation to design with “reasonable skill and care” is not a series of defined duties but an obligation to live up to the general standards of the profession.  You must always remember that the word “reasonable” is used.  This raises a variety of issues over the standards of the professions that arise frequently in allegations of professional negligence and which affect whether the designer has satisfied the test of reasonable skill and care.

Fitness for purpose

The other design standard that is frequently imposed is a fitness for purpose obligation which, like an obligation of reasonable skill and care can arise at common law by statute or by express agreement.

This is a greater obligation than the use of reasonable skill and care and imposes upon the person who has the obligation of a performance criteria.

Fitness for purpose is judged against an objective standard of achievement.

The effect of this is that many of the tests that provide protection to the designer when a reasonable skill and care obligation is imposed are not available to design-builders whose work does not meet a specified standard.

Because of this, fitness for purposes obligations should be excluded or limited if possible.  You will be liable whether or not you exercised reasonable skill and care if the product fails.

Imposition of design liability

Basic Common Law Implied Terms

There is an inbuilt bias against contractors who design works at common law.  It is important to note here that the basic common law standard will be different whether you are a designer or a provider of services and materials ie a design and build contractor.

In the absence of an express commercial  there will be imposed upon a designer an obligation to use reasonable skill and care.  This arises from the designer’s implied warranty that he is reasonably competent to carry out the task he has undertaken.

Where a contractor provides services and materials there will be implied by law an obligation that the contractor will do his work in a good and workmanlike manner and that the result will be fit for its intended purpose.  In other words the contractor’s duty in such circumstances is higher than the pure designer’s and is not limited to the obligation to use reasonable skill and care.

That is basic design standard imposed at common law.  However, common law is not static and it may be that in different circumstances different design standards may be implied.

Other imposed design standards

Notwithstanding the basic imposed common law obligations, a different higher obligation can be imposed upon a designer.  A designer cannot assume that he will always have only an obligation of reasonable skill and care.

An example of this is the case of Greaves (Contractors) Ltd v Baynham Meikle & Partners 1975 where Lord Denning drew the distinction between terms which are implied by law and terms which are implied by fact.  Implied terms arise from the intention of the parties.  Where the presumed intention of the parties is clear a term will be implied by law.  This will be in the case of designers “reasonable skill and care” and providers of services and materials “fitness for purpose”.  Where the parties’ actual intention is clear then the term will be implied in fact.

This leaves designers in the position of being able to have imposed upon them a fitness for purpose obligation.  Two cases illustrate this.  The first is the case of Greaves v Baynham Meikle itself.  Contractors agreed to design and build a warehouse which was for the use of storage of barrels of oil.  Structural engineers were engaged and told the purpose of the building.  The building, which was built following the structural engineer’s design, suffered cracks which were found at trial to be the result of the vibration of the fork lift trucks.

The Court of Appeal held that there was to be implied in fact into the designer’s contract a term that they should design a warehouse fit for the purpose for which it was required, namely for the use of fork lift trucks carrying barrels of oil.

One thing to note about this case is that the specified purpose for which the building was to be used was told to the designer at the time of designing.  The engineers knew the purpose and gave no indication that there was any other standard to be applied other than their complying with the standard.

“The evidence shows that both parties were of one mind on the matter.  The common intention was that the engineers should design a warehouse which would be fit for the purpose for which it was required.  That common intention gives rise to a term implied in fact”

The matter again came before the Courts in the case of IBA v EMI and BICC  which arose out of the collapse of the 1,250 ft. high television mast at Elmley Moor in Yorkshire.  The cause of the collapse was the fracture of a flange caused by wind induced vortex shedding and asymmetric loading of ice.  In this case it was held in any event that the designer had been negligent (ie had not designed with reasonable skill and care) and as such the Court did not have to directly decide the issue of fitness for purpose.  The Court did, however, comment as follows:-

“In the circumstances it was not necessary to consider whether EMI had by their contract undertaken to supply a mast reasonably fit for the purpose for which they knew it was intended and whether BICC had by their contract with EMI undertaken a similar obligation but had that been argued, I would, myself, have been surprised if it had been concluded that they had not done so”.

You will see that where there is a specified purpose of which the designer is aware it is quite possible that a designer who designs without an express contractual provision to the contrary, will be subject to a fitness for purpose obligation.

Imposition of terms by statute

In addition to obligations that are imposed at common law, Acts of Parliament may impose design obligations.  These two trends run concurrently and the fact that there is a statutory standard does not prevent the imposition of a greater standard at common law.

The statutory obligations in this instant arise under the Supply of Goods and Services Act 1982.  Under S13 of the Act there is a term implied by statute that where a designer acting in the course of a business supplies a service that service will be carried out with reasonable skill and care.  Where there is an express term in the contract as to carrying out the service with reasonable skill and care that express term will not negate the term implied by the Act unless it is inconsistent with it.  Further, the Act does not prejudice any rules of law which impose a higher standard.

The effect of this is that where a design and build contractor is operating under a contract which implicitly or expressly imposes upon him an obligation that his design be fit for its purpose he will not be able to argue that his stricter design duty is cut down by the implied term in the Supply of Goods and Services Act.

Terms expressly provided under the contract

JCT Design + Build Contract 2.17.1

1. Insofar as its design of the Works is comprised in the Contractor’s Proposals and in what the Contractor is to complete in accordance with the Employer’s Requirements and these Conditions (including any further design required to be carried out by the Contractor as a result of a Change), the Contractor shall in respect of any inadequacy in such design have the like liability to the Employer, whether under statute or otherwise, as would an architect or, as the case may be, other appropriate professional designer holding himself out as competent to take on work for such design who, acting independently under a separate contract with the Employer, has supplied such design for or in connection with works to be carried out and completed by a building contractor who is not the supplier of the design.
2. Where and to the extent that this Contract involves the Contractor in taking on work for or in connection with the provision of a dwelling or dwellings, the reference in clause 2.17.1 to the Contractor’s liability includes liability under the Defective Premises Act 1972.
3. Where or to the extent that this Contract does not involve the Contractor in taking on work for or in connection with the provision of a dwelling or dwellings to which the Defective Premises Act 1972 applies, the Contractor’s liability for loss of use, loss of profit or other consequential loss arising in respect of the liability of the Contractor referred to in clause 2.17.1 shall be limited to the amount, if any, stated in the Contract Particulars; but such limitation of amount shall not apply to or be affected by any liquidated damages which under clause 2.29 the Contractor could be required to pay or allow in the event of failure to complete the Works or a Section by the relevant Completion Date.

(Old RIBA terms)

“The Architect shall in providing the Services exercise reasonable skill and care in conformity with the normal standards of the Architect’s profession”.

Under the RIBA terms of appointment (now SFA)  and under the JCT Design + Build Contract there is imposed upon a designer the obligation to exercise reasonable skill and care.

The precise required design in the case of contractors design documents will be set out not in the contract but within the Employer’s Requirements and the Contractor’s Proposals.  Very often those documents will contain provisions which could be regarded as “fitness for purpose obligations”.  It is for this purpose that clause 1.3 of the JCT Design + Build contract says:

“The Agreement and these Conditions are to be read as a whole but nothing contained in the Employer’s Requirements, the Contractor’s Proposals or the Contract Sum Analysis shall override or modify the Agreement or these Conditions.”

These words provide that the contract is the primary source of the contractor’s express duty.

It is possible, however, that even with an express duty the Courts will imply another perhaps greater duty on a contractor.  This is, however, unlikely and indeed when it was last attempted in University of Glasgow v Whitfield and John Laing the Court held that with a detailed contract (in that case a JCT 63) there was no room for the implied common law term sought.

“Where there is a detailed contract of the nature found here there is no room for the implication of a duty …. about possible defects in design”

Where a contractor contracts under a non-design contract but accepts or it is alleged accepts design responsibility, in these circumstances there will be within the contract no express term as to design.  One must therefore go back to the implied terms to set out the obligations.  If you will recall the implied terms arise from law and fact.  The difficulty for contractors in this situation is that with no express term they will be in danger of falling foul of implied terms of law and fact.

As contractors, therefore, you must ensure that you do not pick up design responsibility in a non-design contract simply by carrying out design tasks.      

In passing, beware that non-standard design terms mean what they say.  Below are two clauses which say entirely different things:

“The Contractor warrants that it will carry out and complete the design and works using reasonable skill and care”.

“The Contractor warrants that he will carry out and complete the works and design to the standard expected of a reasonably competent contractor used to carrying out works of this size and complexity”.

The first is a straight obligation for reasonable skill and care.  The second is more misleading.  The standard of someone carrying out work and materials implied by statute, and usually implied at common law is fitness for purpose.

Duty to warn

We have looked at how you will attract design responsibility via your contract at common law or as an express term and how you should avoid altering an express contract term and creating design uncertainty.

You can, however, find yourself having design responsibility to people other than those with whom you are in contract as a tortious obligation and a so called “duty to warn”.  You may also owe a duty to warn as an implied term under your contract.

There is no general duty on one party to a contract to warn the other party they are in breach.  However, such a duty can arise in particular circumstances.

This duty falls into two main categories:

1. Duty to warn that something is potentially unsafe or dangerous.
2. A duty to warn of economical consequences.

The duty to warn was considered in University of Glasgow v Whitfield and John Laing 1984 where two categories of duty were defined and considered:-

1. The duty of the part of the contractor owed to the employer of errors in design.
2. The duty of care the contractor owed direct to the architect to inform him of defects in the design which as a contractor he knew or ought to have known about.

Of the first type of duty i.e. the contractor’s duty to the employer, the Judge found that with a detailed JCT contract there was no room for the implication of a duty to warn.

With regard to the duty in tort (there being no contract between the architect and contractor) the Court said that the designer did not rely on the contractor for giving design advice and therefore no duty was owed.

One point to note about the duty to warn is that it is not just a duty to warn of danger but also defects and that it is not just a duty to warn of things of which you are actually aware but also of matters of which you do not know but of which you should know.

In Equitable Debenture Assets Corporation Ltd v William Moss it was decided that, to give efficacy to the contract, a term was to be implied requiring the contractor to warn the architect of design defects and that there was a duty of care in negligence to the employer and to the architect in failing to warn.

In Edward Lindeberg v Joe Canning & Jerome Contracting Ltd (1992) the court decided that an experienced builder was negligent in failing to warn that drawings incorrectly showed walls as not being load bearing when it should have been obvious that some of the walls the builder was required to demolish must be load bearing.

Design and choice

As Hudson’s Building & Engineering Contracts, 12^th Edition, says, “In a construction context, the essential element of the function of design is choice, that is the selection of the appropriate work processes and materials to meet the indicated or presumed requirements of the owner”.

It follows from this that, whether or not you have a traditional contract with architect’s design, or a with contractors design contract, if the contract documents are silent on a particular matter – say the choice of materials – then the choice of materials by the contractor becomes a matter for which he takes design responsibility.

Hudson goes on, “Bearing in mind the possible overlapping areas of design responsibility … 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 manner;

b)     to use materials of good quality.  In the case of materials described expressly this will mean good of their expressed kind and free from defects.  In the case of goods not described, or not described in sufficient detail, there will be reliance on the contractor to that extent and the warranty in (c) will apply);

c)     that both the workmanship and materials will be reasonably fit for the purpose for which they are required, unless the circumstances of the contract are such as to exclude any such obligation”.

The underlined passage is important.  Under the Supply of Goods and Services Act there is a statutorily implied obligation to supply goods and services fit for their purpose unless the circumstances show that the recipient does not rely or that it is unreasonable for him to rely on the skill and judgment of the contractor.    

The obvious defence to a claim of unfitness for purpose is, therefore, to show that the employer did not rely or that it was not reasonable for him to rely on the contractor.

It may be possible to show, for example, the employer in fact relied upon a specialist structural engineer rather than the contractor, or else that he relied upon a specialist supplier who confirmed that the product supplied was suitable.

Continuing design responsibility

Design responsibility is not finite nor is it infinite. It does not cease at the moment that the design is completed.

Hudson defines the duties of the architect as:-

1. To advise and consult with the employer as to any limitation on the use of land.
2. To examine the site, sub-soil and surroundings and advise on the need for employment of
   specialist.
3. To consult with and advise the employer as to proposed works.
4. To prepare sketch plans and a specification with regard to all conditions known to exist and to submit these to the employer with an estimate of probable costs.
5. To elaborate and, if necessary, modify or amend the sketch plans to prepare drawings to be earned out in preparation of contract documents.
6. To consult with and advise the employer on the form of contract and the necessity of employing other consultants.
7. To bring contract documentation to the final state.

What can be seen from these duties is that the designer has a duty in respect of design that carries on throughout the contract. In Britfield Properties -v- Newton it was said

‘The designer is under a continuing duty to check that his design will work in
practice and to correct any errors that may emerge’. It savers of the ridiculous for  the architect to be able to say, as it was here suggested that he could say “True my design was faulty but of course I saw to it that the contractor followed it faithfully’ and be enabled on that ground to succeed in the action.

The continuing duty extends both to the particular design and any matters which become known to the construction industry generally. For example, if it becomes known that the materials originally specified will react differently or are subject to failures unknown at the time of specification then although it would not have been negligent to design this originally it would be negligent to permit construction to proceed.

In Equitable Debenture Assets Corporation -v- William Moss it was held that the architects had both a right and a duty to check their initial design as works proceeded and to correct if necessary. Their obligation to design a satisfactory building only ended where the building achieved practical completion.

Notwithstanding this case it is to be doubted that the obligation ceases at practical completion. In London Borough of Merton -v- Lowe and Pickford it was held that the architect’s duty to undertake proper investigation into defective works (including amending their own design) could continue up to the issue of the final certificate. In his judgment upheld at Court of Appeal level it was said

‘I am now satisfied that the architect’s duty of design is a continuing one and it seems to me that the subsequent discovery of a defect in the design, initially and justifiably thought to have been suitable, reactivated or revived the architect’s duty in relation to design and imposed upon them the duty to take such steps as were necessary to correct the results of that initially defective design”.

You will see that in this respect the architect’s duty is a high one.

N.B. This article does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics / points covered