International Standards - What happens if there is an error?
A recent case raised the issue of liability when a contractor complied with an international standard but an error in that standard meant that defects emerged requiring remedial work.
The Court recognised that a contract sometimes requires a contractor to comply with particular industry standards and achieve a specific result. It held that, if the contract is worded with sufficient clarity, the contractor is liable for failing to achieve that result even if it complies with the relevant standards. However, the wording of this particular contract did not impose a clear liability.
Although the Court found that the contractor was not negligent, it did allow the employer's cross-appeal, finding that the contractor should have conducted tests and experimental verification of certain aspects of its design. However, the Court also accepted that, in this instance, those tests would not have revealed the error in the international standard. As a result, the employer had suffered no loss and was entitled only to nominal damages, which were assessed at £10 – a huge blow for the employer as the remedial works needed cost EUR26.25 million.
The moral of the story, as is so often the case, is that liability will depend upon the wording of the particular contract. As an employer, you should take care to ensure that the contract imposes obligations on your contractor to exercise reasonable skill and care and imposes specific further obligations as well as compliance with any industry standards. On the flip side, if you are the contractor then you would be well advised to keep your obligations to compliance with the industry standards and exclude additional obligations in relation to testing.
MT Højgaard A/S v E.On Climate and Renewables UK Robin Rigg East Ltd and another [2015] EWCA Civ 407.
Posted on 06/02/2015 by Ortolan
