Design Liability – Don’t Make Choices & Void Your Insurance Cover!

Design Liability You Didn’t Think You Had

If you make any kind of choice whatsoever about materials, methods or specification, then you have designed!

This article is primarily to provide advice and help regarding:

  • The risks of design liability.
  • Taking on design liability inadvertently.
  • Voiding your PI (professional indemnity) insurance cover.

risks of design liability, taking on design liability inadvertently, voiding your pi insurance coverJust like the old adage about waiting for a bus and two come along together.  I am currently advising two clients on design liability they didn’t think they had!

So, let’s start by making something absolutely clear.  If you make any kind of choice whatsoever about materials, methods or specification, then you have designed!  It really is that simple.

Here’s a quick example that everyone can follow right now. Imagine you are a joiner, and look at the door in the room you are in.  If the Architect has specified the frame, the door, the handles, and the hinges then they are responsible for the design.

If you choose the size of the screws in the hinges, then you have suddenly and unwittingly become part of the design process and you now have some design liability!

What’s Wrong With That I Hear You Say?

What’s wrong with that, is that as a Specialist contractor, Trade Contractor or Subcontractor, you will be liable for any design you produce if that design subsequently proves to be faulty.

Worse still, in the absence of an express provision to the contrary you will be liable in contract for any failure to produce a design fit for its purpose.  And in tort (a separate branch of law) a Specialist Contractor will be liable for any breach of a duty to use all reasonable care and skill.

This is incredibly important, because as my two Clients are finding out to the tune of well over a £million pounds between them, they aren’t covered by their insurance!  Ouch!

Let’s have a look at the difference between a professional designer’s obligations in respect of design and your obligations if you design and install.

A Consultant Designers Responsibility

The design responsibility imposed upon the Employer’s consultants arise from the conditions of contract, by statute and in accordance with the law of torts.  The conditions of engagement if in accordance with standard conditions e.g. RIBA or ACE will stipulate the extent of the consultant’s design responsibility.

In the absence of any express conditions of appointment, the extent of the Consultant’s design liability will be implied and is in fact less onerous than that of a Contractor or Subcontractor who provides both a design and install service.

The Implied Terms Imposed Upon A Consultant Are:
  1. That he is reasonably competent;
  2. That he will exercise the ordinary skill of an ordinary competent man exercising that particular skill.

The implied obligations of the professional Consultant have been developed from cases involving the medical and legal professions where a result cannot be guaranteed.  The position can be summed up by saying that in the absence of any express terms to the contrary, the Consultant’s implied obligations would be to use reasonable skill and care.

In contrast, the Contractor or Subcontractor’s design responsibility has its roots in the law related to sale of goods where the law imposes an obligation to supply goods fit for purpose where the purpose is made known to the seller and the buyer relies upon the seller’s judgement.

Design and Construct Responsibility

Most standard forms of building contracts provide a clear distinction between the duties of the designer and the duties of the Contractor, so that if a building proves to be faulty because of both design and construction faults the Employer is faced with bringing an action against both the designer and the Contractor.

The principle behind a design and build contract is that the Contractor and his Specialist Subcontractors are responsible for both design and construction.

The Courts have readily implied the following terms into design and build contracts.

  1. That the work will be carried out in a workmanlike manner.
  2. That materials of good quality will be used.
  3. That the materials and work (including the design) will be reasonably fit for their respective purposes.

The constructor’s duty to design a building fit for its purpose is an absolute duty independent of negligence.  It is a duty which is greater than that imposed upon a designer employed solely to design, who would only be liable if (in the absence of an express provision) he was negligent.

Therefore, if you carry out work on a design and build basis, and it is not fit for purpose, you will, in the absence of an express provision, be liable in tort for breach of a duty of care

What’s Wrong With Fitness For Purpose?

The problem in trying to get one’s head around this, is that “guaranteeing a result” and “fitness for purpose” have become confused.  There is nothing at all wrong with asking you to produce an installation that meets specified performance requirements. That is exactly what you are being paid to do.

The problem arises because you are not just meeting specified criteria, you are guaranteeing that what you install will meet the Employer’s needs irrespective of what you knew or didn’t know, and irrespective of what the Employer actually asked for!

Why Does It Matter?

A reason why the distinction between these two levels of responsibility is so contentious is because most professional indemnity (“PI”) policies will cover you only in the event of a claim arising out of your professional negligence (i.e. a failure to exercise reasonable skill and care).

This leaves you uninsured against a contractual claim for breach of a fitness for purpose obligation.  Not only do PI policies generally expressly exclude a fitness for purpose risk (since it is difficult to quantify this risk in respect of both probability of occurrence and magnitude of loss), some may even be completely invalidated.


It is of fundamental importance for both you and the Contractor/Client to consider the issues relating to risk and responsibility when negotiating any construction contract, but particularly where design and build are combined.

And it is absolutely essential that you don’t go around exercising choices or making what are effectively design decisions without understanding what you are doing and the enormous risk you are taking.

Absolute obligations for fitness for purpose relating to design should be approached with caution and removed or diluted where possible.  This must be done irrespective of whether or not that obligation arises by way of express wording, or by “accident” i.e. where the contract is silent about limiting your design liability.

The risk of performance to the onerous standard of fitness for purpose, must first be identified and, if necessary, removed or counterbalanced by seeking to limit your overall liability under the contract.  But you must always take account of the consequences for your PI cover.

After all, what’s the point of paying a very expensive premium, if you are then going to void that cover by not understanding what you are actually doing.

So, back to my joiner and door example: “What type and size screws do you want in these hinges Mr Designer?”

Want To Know More?

We not only provide great free advice via our web site, but we also provide practical hands-on help to apply the right strategies, principles and techniques at the appropriate time, to make your business even more successful.

I have been assisting Specialist Contractors just like you, to resolve liability for design and all sorts of other problems for the last 30 years.  And, via our network of Consultants has been providing services to our Buddies (members) for the last 12 years.

We are pretty confident that we can help you, so please feel free to call our friendly team and speak directly to an expert on 01773 712116.  Initial advice is free, subject to you being a UK based Specialist Contractor, Trade Contractor or Subcontractor.

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