Following my recent webinar for the IChemE Special Interest Group, I ended up debating the relative merits of the IChemE Professional Services Contract (Short Form, 2015) and the IET/IMechE MF/4. This blog outlines some of the aspects you need to consider when choosing MF/4 as part of your contract strategy.
There are similarities as both are:
- services contracts, based on works contracts
- short form
- fairly easy to read, understand and use
Regrettably both have room for improvement. Interestingly, although the Silver Book starts by mentioning mutual trust and fairness, it is MF/4 which has more equitable provisions (eg mutual termination).
The commentary states that MF/4 is intended largely for investigative or advisory services and is not intended ‘for use where a consultant is required to lead, project manage or otherwise contribute to a complex multi-disciplined project, to provide design services to a construction contractor, or to perform the duties of a [CDM Co-ordinator].’
MF/4 and its Commentary are free to download from the IET website.
MF/4 is a very basic appointment. Some of the clauses are merely a reflection of the terms that would be implied by case law and represent the bare minimum the courts would impose eg variations (clause 4), competency (clause 5.1), and confidentiality (clause 12).
At the other end of the spectrum, the intellectual property licence (clause 14.1) is incredibly wide, although it does allow the consultant to keep the rights.
Works into Services
As it was developed from the other Model Forms, MF/4 – like the Silver Book – contains some clauses more relevant to a works contract:
- Delay – the consultant can claim an extension of time, additional costs or terminate for delay (see below)
- Premises and facilities – these are rarely listed in a consultant appointment (clause 3.1)
- Records – the consultant has to keep records for 2 years after completion (clause 15.1).
MF/4 does not contain all the provisions you might expect to see in a consultant appointment. As someone who has prepared a 500-word consultant appointment, I don’t lightly suggest adding to a standard form to make it longer! Depending on your project, you should consider adding these:
- Payment provisions to comply with the Construction Acts – although terms can be implied under the Scheme, implied terms are less likely to be complied with
- Adjudication – although for ‘construction contracts’ the right is mandatory and will be implied
- Duty to warn about the use of prohibited materials – not specifying such materials comes under the requirement to use all reasonable skill, care and diligence (clause 5.1)
- Project partners – the appointment makes no reference to novation, third parties and their interests, providing warranties or third party rights, or co-operation with the rest of the project team. Only the latter would be implied by case law.
The Consultant can claim an extension of time, and/or additional costs due to:
- information errors or omissions or in client decisions (clause 2.1)
- client acts or omissions or other circumstances listed in the services schedule (clause 9.1)
- circumstances beyond her control (force majeure, clause 13.1).
For prolonged delay, she can also terminate (clause 13.1).
I’m not really sure of the real benefits of an extension provision in a services agreement. If the services are limited and time critical then this may be appropriate, but for the majority of appointments it is an unnecessary distraction. Perhaps it merely reflects equivalent provisions in the NEC Professional Services Contract or is a flow-down from the works model forms?
Limits on Liability
MF/4 limits the consultant’s liability, except for personal injury (and presumably death) to a sum to be agreed. The commentary recommends that the limit is “selected taking into account the nature of the services and the use to be made by the client of the consultant’s work… It is not unusual to limit the Consultant’s liability to the level of the fee.”
The few cases we have relating to services upheld limits more than just the fees as reasonable as required by the Unfair Contract Terms Act 1977, so beware choosing a limit that is too low!
Which would you choose?