Standards of care in construction contracts: What did the Supreme Court have to say?

This blog post looks at our recenet Breakfast Briefing on “Standards of Care in Construction Contracts” with particular reference to the recent Supreme Court decision in MT Højgaard A/S v E.On Climate & Renewables UK [2017] UKSC 59. A link to the slides which accompanied our talk is here.

Whether a D&B contract contains an obligation to carry out the works with reasonable skill and care or to ensure that the works are fit for purpose can make an enormous difference to the contractor’s liability in the event that the works turn out to be defective. The Højgaard case is a good example of this. The Supreme Court has decided that where the contractor’s retainer contained both an obligation to carry out the works with reasonable skill and care and an obligation of fitness for purpose, the contractor was liable for defective works even where there had been no negligence but the design was carried out in accordance with the Employer’s Specification, which contained an error. The implications for the contractor can be severe, especially given that it is usual for professional indemnity insurance to exclude liability on the basis of fitness for purpose. The contractor may not just be held liable for the defect in the Employer’s Specification, but may also find itself uninsured for very significant sums. Moreover, Højgaard is the latest in a series of recent Supreme Court decisions concerning the interpretation of contracts which indicate that the modern trend is to favour the primacy of language over the more ‘commercial’ approach adopted over the preceding 20 years.

It seems more important than ever before for contractors and construction professionals to ensure that their retainers do not inadvertently subject them to absolute obligations of fitness for purpose by imprecise and careless drafting.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.