Construction Risks Newsletter February 2017

Published 14 February 2017

In this edition we consider a number of decisions in which the liability for defective products was considered by the court. We also report upon two cases in which the court was asked to consider the effect of limitation of liability provisions, one of which challenges any previously held belief that the meaning of the term "consequential loss" could be regarded as having been settled  as a matter of law. Similarly the consequences of parties who contract on the basis of a letter of intent or simple contract in failing to reach agreement on a cap on liability is highlighted. Finally, we outline some important changes in the payment regime of the JCT 2016 Suite of Contracts and the LMA's Guidance on the Duty of Fair Presentation Rules introduced by the Insurance Act 2015.

Exclusion Clauses: The Meaning Of Consequential Losses

In the recent decision of Star Polaris LLC v HHIC-PHIL INC [2016] EWHC 2941 (Comm), the High Court was yet again asked to consider the effect of an exclusion clause and in particular the meaning of the term "consequential losses".

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The Dangers of Letters of Intent

The Technology and Construction Court matter of Arcadis Consulting (UK) Ltd v AMEC (BSC) Ltd [2016] EWHC 2509 (TCC), is another case which warns parties of the perils of proceeding without a formal contract in place or an agreement in relation to a cap on a contracting party's liability.

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JCT Contracts 2016 – changes to the payment regime

With the exception of the Major Projects Forms, JCT has now issued updates to the entire suite of contracts. Whilst the changes are not as far-reaching as those brought about by previous editions, there are some important and, we consider, helpful amendments to the payment provisions.

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Willmott Dixon Construction v Robert West Consulting [2016] EWHC 3291 (TCC)

The court has given useful guidance of the circumstances in which a contractor will be liable in negligence for damage caused to third party property as a consequence of the defective works of its sub-contractors, and the circumstances in which a contractor will have a "non-delegable duty" to prevent such loss and damage.

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The Interpretation of Clauses Limiting Liability: McGee Group Ltd v Galliford Try Building Ltd [2017] EWHC 87 (TCC)

In this case, the court, has confirmed the recent approach of the courts to give effect to limitation clauses and to give effect to their natural and ordinary meaning.

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Who Knows Best? Manufacturer not liable for defective product

The Court of Appeal recently decided Howmet Ltd v Economy Devices Ltd & Others (2016) in which it considered a manufacturer's continuing liability for defective products and how the knowledge of employees should be attributed to companies.

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Fluor Ltd v Shanghai Zhenhua Heavy Industries Ltd – Interpretation of Fitness for Purpose Obligations

The recent TCC decision of Fluor Ltd v Shanghai Zhenhua Heavy Industries Ltd [2016] EWHC 2062 provides valuable guidance on fitness for purpose obligations and will be useful to parties who contract to buy or sell goods, regardless of the nature of those goods. The decision also provides a stark reminder that parties should be careful when considering compromising their rights to future claims.

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Part 36 offers: Wes Futures v Allen Wilson Construction [2016] EWHC 2863 (TCC)

Costs of Adjudications not recoverable under Part 36 Offer

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LMA model clauses clarify scope of Duty of Fair Presentation

The LMA have produced guidance on the Duty of Fair Presentation (DFP) introduced by the Insurance Act 2015.

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Construction News

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