JCT DB 2024 – a bit of ‘give and take’ on contractor design liability

The JCT 2024 Design and Build contract released on 17 April contains several key changes to the clauses establishing the contractor’s liability for design. Employers and contractors should be particularly aware of the updates in two main areas – around the contractor’s standard of care and fitness for purpose obligations.

Clause 2.17.1 of the previous 2016 form likened the standard of care to be expected of a contractor to that of an architect or other professional designer. In the 2024 contract, this standard has been elevated to that of a qualified and experienced architect, or other appropriate professional designer. This reflects the greater levels of scrutiny placed on the “competence” of contractors and others involved in projects following changes made to the Building Regulations 2010.

On fitness for purpose obligations, a newly included clause 2.17.1.2 in the 2024 contract has clarified that the contractor has no greater duty, obligation or liability in respect of design than to exercise reasonable skill and care, and in particular that under no circumstances will the contractor be subject to any duty, obligation or liability which requires that any such design shall be fit for purpose.

Fitness for purpose obligations have long been a particular anxiety for contractors in relation to carrying out design. This is because they create an absolute obligation for contractors to ensure that the design meets the purpose for which it was intended.  Such liability is not avoided by  the contractor having used reasonable endeavours when carrying out its design and so is subject to any fault or negligence which the contractor may have carried out while preparing the design.

The fitness for purpose obligations derive from statutory obligations in the Sale of Goods and Services Act 1982. Therefore, absent of any contrary express provisions in the contract, this obligation would apply to both any materials and any services, such as design services, supplied by the contractor.

The newly added clause is a reaction to case law such as the Supreme Court case MT Hojgaard A/S v E.On Climate & Renewables UK Robin Rigg East Ltd and another. Contractors have been held liable for breaching fitness for purpose obligations contained in technical specification documents that the courts decided were not qualified by the reasonable skill and care clause set out in the DB 2016 contract form. In effect the courts applied the higher standard.

Contractors not only face the risks of having to meet a significantly higher standard in terms of carrying out the design than a reasonable skill and care obligation, but also have the difficulty in finding professional indemnity insurers who will provide cover to contractors or consultants where there is a fitness for purpose obligation. As a result, contractors routinely insist that any clauses inserted by employers which could confer a fitness for purpose obligation are removed and replaced by provisions similar to that now contained in 2.17.1.2, making clear that the contractor will not have a fitness for purpose obligation imposed on them.

Michael Allan, construction law expert at Pinsent Masons, said the changes made by the JCT to the design clause make sense and reflect the reality of the market.

“In reality, it is unlikely that many employers will amend this new clause or be able to successfully agree with their contractors for the clause to be removed,” he said.

However, an aspect that has not been amended in the new version are the provisions which deal with the extent to which the contractor is responsible for design of the works. Allan explained that JCT have not made the contractor responsible for all design. Clause 2.11 of the 2024, as in the 2016 contract form, states that the contractor is not responsible for the contents of the employer’s requirements or verifying the adequacy of any design contained in them. This position is regularly reversed by employers in Schedules of Amendments so that the contractor is liable for all design including the designs carried out by others and contained in the employer’s requirements. The intention is that the contractor takes sole responsibility for the design as well as the construction of the project. As the position has not changed in DB 2024, employers will need to continue to make those amendments.

James Ladner, contract expert at Pinsent Masons, described JCT’s changes on design as “continuing the theme of evolution not revolution”. He said: “In a reaction to the market and to case law, the JCT has added a bit to contactor’s obligations but drawn a clearer line on fitness for purpose. Defintiely a bit of give and take. They have not, however, changed the thing that is most commonly amended - the contractor not being responsible for ‘all design’, so for many that will be seen still as off-market.”