Recent case: Duty of consultant to arrange performance bond

A building contract contained an obligation on the contractor to provide a performance bond in the form attached to the building contract.  The contractor did not provide the bond and became insolvent.  The employer blamed its quantity surveyor/employer's agent (the “consultant”).  The employer argued that the consultant had failed in its duty to “prepare contract documentation and arrange for such documents to be executed by the parties thereto”.  The Court said that this obligation was not absolute but was subject to a duty to take reasonable skill and care and that the consultant had in fact exercised reasonable skill and care in continuing to push and cajole the contractor on the performance bond point.  In the circumstances it would not have been reasonable for the consultant to advise the employer to withhold interim payments from the contractor (on the basis that the performance bond was still outstanding) because:

  • The contractor was in financial difficulties and to do so may have pushed it over the edge.
  • The contractor had said that it was going to provide the bond.
  • The contractor was already being underpaid due to confusion between the payment schedules in the contract and those provided by the financier.

I took away from this case two useful points:

  1. For employers. Be careful how the services are drafted.  Often they have to be carried out subject to the duty of reasonable skill and care.  If you want to make an obligation absolute you need to say so.
  2. For consultants.  The Judge took a very sensible and reasoned approach and looked at the acts of the consultant in all the circumstances to decide that it was not negligent in this case.  This is however a reminder that you should always provide the entire range of options to the employer and then help the employer to decide which is best in the circumstances.

The case is available on BAILII: Sweett (UK) Limited v Michael Wight Homes Limited

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