Key Issues In English Construction Law

Key Issues In English Construction Law Presented by: Prof. Bailey Date: 18 November 2022 Tilting At Windmills - "What giants?" said Sancho Panza. - "Those thou seats there," answered his master, "with the long arms, and some have them nearly two leagues long." - "Look, your worship," said Sancho; "what we see there are not giants but windmills, and what seem to be their arms are the sails that turned by the wind make the millstone go." - "It is easy to see," replied Don Quixote, "that thou art not used to this business of adventures; those are giants; and if thou art afraid, away with thee out of this and betake thyself to prayer while I engage them in fierce and unequal combat." - FFP-giant or windmill? What Is The FFP Issue? - The Contract specifies that the Contractor is to provide X (e.g. a windmill). - X is defined or specified in the Contract. - Contractor duly supplies X, however X turns out to be defective / unsuitable because X is not fit for its intended purpose, BUT the Contractor has acted with reasonable skill and care in supplying X. - Is the Contractor liable (in contract) for the defective / unsuitable nature of X? (i.e. because it is not fit for its intended purpose - FFP = strict standard -> liability in the absence of fault. Implied FFP - Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095 • LORD DENNING M.R. This case arises out of a new kind of building contract called a "package deal." The building owners were Alexander Duckham & Co. Ltd. They wanted a new factory, warehouse and offices to be constructed at Aldridge in Staffordshire. The warehouse was needed as a store in which barrels of oil could be kept, until they were needed and despatcher, and in which they could be moved safely from one point to another. The "package deal" meant that the building owners did not employ their own architects or engineers. They employed one firm of contractors to do everything for them, called Greaves & Co. (Contractors) Ltd. It was the task of the contractors not only to provide the labor and materials in the usual way but also to employ the architects and engineers as sub-contractors. The contractors were to do everything as a "package deal" for Alexander Duckham & Co. Ltd. • Warehouse for storing oil to be constructed. • Forklifts would move the oil barrels around the warehouse. • Contractor engaged reputable design engineers (i.e. contractors not negligent in appointment of engineers). • After construction, cracks formed in the floor slabs -> warehouse became unusable. • The purpose / intended use of the warehouse was known to the contractor and the design engineers (i.e. storing oil, which required moving barrels across the floors). • What were the obligations of the contractor vis-à-vis the employer? Towards A Meaning... - Two key elements for implied FFP: • Communication of the purpose of the structure - although this will usually be apparent? E.g. a warehouse to store drums of oil. • Reliance by the employer on the contractor's skill and judgment. Of old windmills... - Bowers v Chapel-en-le-Frith RDC (1910) 9 LGR 339 • Contractor engaged to supply a waterworks system which used a windmill @ Wormhill, Derbyshire. - Bowers v Chapel-en-le-Frith RDC (1910) • "The contractors will be required to obtain the windmill tower and pump from Messrs. Rickman & Co, windmill engineers, 13, Walbrook, London EC, for which a sum of £127 has been included in the quantities...". • Lawrance J* (at 343):  The council then instructed the contractor to provide a working windmill within a particular period of time, failing which they would take the work out of the contractor's hands etc.  Π Was the contractor liable for the defective windmill procured from Rickman & Co? • Lawrance J (at 346):  "The mill was chosen by [the council], and it was the mill that [the contractors] were bound by their contract to erect...It was not part of their contract to guarantee in any way that the mill would be efficient..." etc.  : No FFP or similar obligation -> the contractors did what they were required to do by the contract -> no reliance by employer. MT Højgaard A/S v E. On Climate & Renewables UK Robin Rigg East Ltd [2017] UKSC 59 - EPC contract to build a wind farm. - Requirement for design life - Requirement for foundations. - A requirement to follow a design standard for the foundations... - Clearly, the foundations were not FFP was the contractible - The contractor had done nothing wrong - it had (as the contract required) followed the DNV standard which contained the error. The contractor had no way of detecting the error in the standard. - No reliance by the employer on the contractor's skill / expertise in this respect -> it told the contractor what it had to do in designing the foundations (i.e. follow the standard). - So was this case like Bowers v Chapel-en-le-Frith RDC? Can an absence of reliance by the employer on the contractor's skill / judgment negative (at least in part) the existence of an FFP obligation? Concluding Thoughts 1. FFP is generally an implied obligation for a contractor (Greaves). 2. The employer's reliance on the contractor's skill / judgment is a key factor to the implication of an FFP obligation (hence, the absence of reliance may negative an FFP obligation - as in Bowers). 3. Express FFP obligations = different kettle of fish. No need for reliance by the employer on the contractor's skill / judgment. Contractor may even take the risk of errors in employer's requirements leading to the works not being FFP (Højgaard).