A recent Supreme Court case* has garnered much attention, articles and discussion from lawyers about its approach to fitness for purpose (especially since whether or not there is a fitness for purpose obligation makes or breaks their multi-million pound dispute).
But I want to focus on why it happened and what you can do to avoid the embarrassment of publication riches afforded by a Supreme Court decision, as well as months in court (the decision was given 8 years after the defects appeared) and a vast stack of cash for legal fees…
Say What You Mean
The hearing concerned
“how the court should construe the somewhat diffuse documents which constituted, or were incorporated into, the ‘design and build’ contract in this case.”
From this opening statement, you should have an inkling that my first tip will be…
Tip #1: ensure your contract is coherent (not diffuse)
The contract itself was for the design and construction of off-shore wind turbines in the Solway Firth. They failed a few months after completion in 2009.
As with most construction contracts, the contract was a mix of technical requirements, international standards, legal conditions and jargon. Among the myriad quality requirements were:
- a minimum design life of 20 years
- an implied requirement to use reasonable skill and care in design (this post explains that term)
- plant and works will be free from defective workmanship and materials
- good industry practice (which was defined by reference to the skill, diligence, prudence and foresight of a fully skilled contractor engaged in similar undertakings)
- fitness for purpose, based on purposes sets out or inferred from the employer’s requirements (read more on purposes)
- carrying out the works in a professional manner and in accordance with modern commercial and engineering, design principles and practices
- the works, when completed, complying with the requirements of the agreement
- the design of the works (and the completed works) satisfying performance specifications or requirements of the employer.
The contractor alleged that critical and onerous requirements were tucked away, unclear, not in plain terms, and that it was ‘improbable’ that a quality requirement should have been included in the technical specification (not the contract conditions).
Avoid the Avoidable
Unsurprisingly, the courts all considered that these requirements were inconsistent.
Tip #2: ensure consistency of the whole contract (ideally by peer review of the suite of documents)
The Supreme Court drew attention to the contract documents as being ‘of multiple authorship and containing lots of loose wording’ and that the contract as a whole contains many ‘ambiguities, infelicities and inconsistencies’. They also note that the nub of the decision is based on a slender thread in the technical requirements, not the legal conditions of contract.
The Supreme Court said that its role was to determine what the contract meant, irrespective of inelegant, clumsy and bad drafting. Although the quality of the drafting would tend to prevent the court attributing an improbably and unbusinesslike intention to the words used.
Tip #3: Don’t rely on the court to sort out badly-drafted contracts in your favour
In summary: create clear simple robust contracts, ideally based on testable quality objectives and defined obligations. Then you won’t spend years working out what the parties were meant to have done, long after the project has finished…
*Case: MT Højgaard A/S v E.On Climate & Renewables UK, Robin Rigg East Limited  UKSC 59