A subcontractor on an anerobic digestion facility seems to have found itself in hot water when the tanks it had designed and supplied failed during testing.
The main contractor (DBE Energy) had asked Biogas to provide mechanical and process design services for the facility, without any contract being signed or agreed. DBE later entered into two design and supply contracts for tanks for that facility.
The court had to determine the subcontractor’s responsibility for the design of those tanks.
Design scope
The subcontractor argued that didn’t have to take account of the overall mechanical or process elements of the system for the facility, and its design was limited to drawings provided as part of its quotation.
The court decided that this was nonsense. To comply with its implied duty to exercise reasonable skill and care (the minimum standard of design under English law), it had to check that the tank design was consistent with the system into which it would be integrated.
Design standards
Essentially, there are two standards that apply to design services:
- reasonable skill and care – a simple input obligation, akin to ‘average competence’
- fitness for purpose – a strict outcome-based obligation where performance is everything.
The tanks did not comply with relevant product regulations and this was enough to ensure the subcontractor had failed to comply with the reasonable skill and care standard. It did not act like a ‘reasonably competent’ designer.
The court found that since the tanks were neither fit components in their own right nor fit for safe integration into the hot water system at the facility, the subcontractor had failed to comply with its statutory requirements to provide tanks which were reasonably fit for purpose.
On top of these contractual responsibilites, the court also clarified that the subcontractor would have duties to others in tort (eg negligence) relating to its design and supply of the tanks. This means other companies involved in the project could bring a claim relating to the defective tanks.
What should you do?
Always state your quality requirements clearly in your contract, whether the provider is carrying out just design, just supply, or design and supply. You shouldn’t have to rely on implied terms, statutory provisions or the competence of your provider.
If you are a contractor or subcontractor carrying out any design, assume you have to achieve a fitness for purpose standard. It normally applies unless you expressly say otherwise.
Case: BE Energy Ltd v Biogas Products Ltd [2020] EWHC 1232
