Failure is your new best friend

Contracts should help you do business.

But we have to be realistic. Change happens. Risk events occur. Humans are fallible.

Most contracts do not anticipate ‘failure’ in stark terms. However, not every project will be a success, especially those which are on the edges of what is currently possible. Is that anyone’s fault?

Failure can be consistent with using reasonable skill and care. In IBA v EMI (1980), the House of Lords quoted from a 1853 case:

…if you employ [an architect] about a novel thing, about which he has had little experience, if it has not had the test of experience, failure may be consistent with skill. The history of great improvements shows failure of those who embark upon them.

What should you do?

To be more successful with your contracts you should:

  • take specific precautions: especially for daring and difficult adventures
  • assess and appreciate the risks of each individual project
  • be prepared to walk away when the risks are too high: “the law requires even pioneers to be prudent
  • decide which is the most important objective
  • obtain and check all data and assumptions
  • specify the quality standards you want (not rely on implied terms)
  • record all these aspects in your contract.

And if you are working on a D&B project, read my slideshare Checklist for use on D&B Projects.

Case: Independent Broadcasting Authority v EMI Electronics and BICC Construction (1980) 14 BLR 1

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