Just because a design contains errors does not mean that the architect is liable to the owner or contractor for the fix. Why? Because the designer’s liability is based on whether it met a “standard of care of a professional” and not on simply whether a mistake was made. Contractors, on the other hand, are held to a more exacting standard. They must do their job right.
In an effort to place more responsibility on the contractor, including responsibility to detect the designer’s errors and omissions (and so not having to prove professional negligence), owners are inserting risk-shifting language in the terms and conditions stating that the contractor has to detect errors in the design.
A systems contractor I know sent me this example from a subcontract for a hospital, which is a complicated construction building type:
“Subcontractor represents and agrees that it has had access to all Contract Documents and has carefully examined and … has previously notified Contractor in writing of all ambiguities, inconsistencies and omissions … in the Contract Documents … ”
The clause passes down an identical one in the general contractor’s agreement with the owner. What exactly does this clause mean, and what responsibilities are being created for the subcontractor? Does the clause apply only to obvious errors in the design, or does it extend to items such as load calculations, routing, choice of devices, etc.? Note that the language quoted does not say what happens if the subcontractor misses something in its “careful examination.”
An even more extreme example of a clause that attempts to shift the risk of drawing errors to the subcontractor comes from a large theme-park construction project: “Large scale drawings take precedence over smaller scaled drawings. Figured dimensions on the drawings take precedence over scaled dimensions, and noted items on drawings take precedence over graphic representations.”
This clause turns standard contract law on its head. Normally, in interpreting contracts, the more specific takes precedence over the more general. Here, on the other hand, general arrangement drawings have a higher priority than details that the designer created. So, what happens when the details are wrong, or a dimensioned drawing shows an installation that will not fit where the large-scale drawings show where it should go?
There are no easy answers to these questions. There are few reported court decisions that interpret these types of clauses. Often, the cases where such clauses appear go to arbitration, where there are no publicly reported decisions. However, some guidance may be obtained from federal government contract decisions, although the government does not typically employ these kinds of provisions.
Patent versus latent errors
In these government decisions, distinction is made between patent (obvious) errors and omissions and latent (hidden) ones. An example of the reasoning on patent versus latent is Allied Contractors Inc. v. U.S., 381 F.2d 995 (Ct. Cl. 1967): “The ‘errors’ of which Plaintiff complains were so obvious that the conclusion is compelled that Plaintiff knew of them or certainly should have recognized them as such.”
Of course, what is obvious after the fact, and what is not, at the time of bidding is determined after the problem has arisen and been recognized, and in some respects is in the eye of the beholder. In addition, missing items are often the hardest to detect.
For patent design errors, the fix is at the subcontractor’s expense. Keep in mind that the “obvious errors” rule applies because courts recognize that contractors are not normally required to do their own investigation of the plans and specifications. In other words, the contract does not normally require the contractor to essentially give its own design warranty.
The clause from the hospital job, noted above, comes close to creating a subcontractor warranty that the design is error-free, except as noted by the subcontractor. As such, the patent versus latent rule may or may not apply. With the amusement park clause, a different approach is taken by the owner, which seems to require the subcontractor to work out its own design solutions for design errors at its own cost.
What you can do
So, what can you do? When you detect a clause that appears to shift design responsibility to you, it may be worthwhile to do a thorough review of the drawings and keep proof of your efforts. Documentation of that review should be created and maintained, as the patent versus latent rule may have some application. In addition, written notice of any suspected problems you detect should be sent to your other contracting party.
For an amusement park type clause, you may also need to add to your “notice” letter a description of your proposed fix, a caveat that the fix needs review and approval by the owner and your estimated cost.
This area of construction law is a developing one and will vary by state. Your construction attorney should be consulted for your questions.
Header image by Shutterstock / Iconic Bestiary.