Legal Practice Notes

This Practice Note examines product liability insurance primarily through the lens of participants in the construction sector. While this form of cover is relevant to many other industries, for present purposes those fall beyond the remit of this Practice Note (see Practice Note: Product liability and product recall insurance and Q& A: What is Products Liability Insurance?). What is product liability insurance and who needs it? In the construction context, product liability insurance is a form of cover that safeguards the insured against liability for death or bodily injury (excluding employees) or for property damage, where such liabilities arise from defects in products that have been used in the course of a construction project. Firms that manufacture and/or supply products intended to be incorporated into a building structure may face legal action if faults in those products cause damage or injury to the structure...

This Practice Note This Practice Note explains the factors to carefully weigh when deciding whether expert evidence is necessary, and how to approach that assessment. It sets out why appropriate, relevant expertise—both of instructed experts and any proposed candidates—matters, and identifies the kinds of issues and disputes that may call for expert input, including questions of foreign law, as well as how to research and evaluate other categories of expert material. This Practice Note also gives guidance on interpreting and applying the pertinent provisions of the CPR. Depending on the court in which your case is progressing, you should be alert to any further and applicable requirements—see: Court specific guidance. This Practice Note should also be read alongside the following Practice Notes: Applying for permission to adduce expert evidence Duties of an expert When instructing experts, you are expected to have regard to: all...

This Practice Note examines early neutral evaluation ( ENE), a type of alternative dispute resolution ( ADR). What is ENE? ENE involves the parties asking an impartial evaluator to provide a view on the strengths of the case or on discrete issues. Typically, the evaluator is a solicitor, barrister or subject-matter specialist. On occasion a judge may act in this role; see: Judicial ENE. As with other ADR processes, the structure is agreed by the parties, but it commonly features: a more interventionist approach than mediation; rather than shuttling between sides, the evaluator sets out, often in firm terms, their view of the probable result the evaluator’s view is usually not binding their assessment can provide a platform for later settlement discussions As the evaluator’s view is typically non-binding and frequently delivered without the full factual record that a trial would reveal, a party...

Introduction to delay and disruption A construction contract will usually set out the date by which the works must be finished (the 'completion date'). However, over the life of a construction project, events commonly arise that delay or disrupt progress, and may therefore hinder the contractor’s ability to achieve completion by the completion date. Delay and disruption are among the most frequent drivers of claims and disputes on construction projects. It is important to distinguish delay from disruption—in programme terms, this difference marks the line between critical and non-critical delay. Disruption is often, and wrongly, treated as the same as delay, and they are routinely discussed together (as 'delay and disruption') as though they were identical with identical consequences. Delay and disruption are, nonetheless, distinct concepts. Their implications are not the same. How either is addressed will depend on the particular cause in each...

Defending a tort claim—general considerations In practice, many actions are defended by arguing that the defendant owed no duty to the claimant, that no duty was breached, or that the chain of causation was interrupted. In any of these situations, the claimant has not established that the defendant is prima facie liable. For guidance on proving liability in negligence, see the following Practice Notes: Negligence—key elements to establish a negligence claim Negligence—when does a duty of care arise? Negligence—when is the duty of care breached? This Practice Note examines the defences capable of excusing a defendant from liability where prima facie liability has been shown. Limitation defences in tort claims Even where a duty existed and was breached, a claimant may still find their case opposed or struck out if the defence can demonstrate that the proceedings are...

Under the Defective Premises Act 1972 ( DPA 1972) A person undertaking work either: for, or connected with, providing a dwelling ( DPA 1972, s 1(1)); or concerning any part of a “relevant building”, being a building with one or more dwellings ( DPA 1972, s 2A); owes a duty to see that the work is carried out in a competent or, as appropriate, professional way, using suitable materials, so the dwelling is fit for human habitation. “ Fit for habitation” is not a freestanding obligation; it is the yardstick by which “competent”/“professional” execution and “suitable materials” are assessed. It is the measure by which workmanship and the appropriateness of materials are evaluated. Accordingly, liability under DPA 1972, ss 1(1) and 2A is strict: where the works or materials supplied have made the dwelling unfit for habitation, the defendant is in breach of the...

This Practice Note outlines the core principles governing awards of damages in tort actions. It addresses the compensatory purpose of tort damages; separates general from special damages; explains when exemplary (punitive) and aggravated damages may be available in tort; considers restitutionary and ‘user’ damages; sets out the date and method of assessment; deals with interest on tortious awards; and the reduction of damages through contributory negligence and mitigation. It also summarises when damages may be recoverable for a tortious wrong, including negligence. For further reading, see Practice Notes: The remedy of damages—general principles; Loss of chance damages; Claiming damages—tort and contract claims compared. It does not cover damages in clinical negligence or personal injury claims. General principles of liability in tort claims To succeed in a tort claim for damages, a claimant must, on the balance of probabilities, establish that: the...

Section 1 of the Corporate Manslaughter and Corporate Homicide Act 2007 ( CMCHA 2007) introduces the distinct offence of corporate manslaughter. The CMCHA 2007 applies across the UK and, at the same time, brings in the offence of corporate homicide for Scotland. This Practice Note addresses corporate manslaughter, not corporate homicide, because certain CMCHA 2007 provisions treat the two offences with slight differences. See Practice Note: Involuntary manslaughter. Corporate, not individual, liability The CMCHA 2007 targets organisational accountability and does not extend to directors or other individuals occupying senior positions within a company. It creates no personal liability under the CMCHA 2007. Further, CMCHA 2007, s 18 expressly provides that a person cannot be guilty of aiding, abetting, counselling or procuring the commission of corporate manslaughter, nor can a person be guilty of encouraging or assisting an offence of corporate...

The Insolvency Act 1986, s A1 ( IA 1986) The Insolvency Act 1986, s A1 ( IA 1986) sets out a mechanism allowing directors of insolvent companies, or those likely to become insolvent, to secure a moratorium. The initial period is a 20 business day period, with scope for extension in defined circumstances. The regime is underpinned by the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, r 1A.1. Its purpose is to give otherwise viable businesses breathing space to reorganise or attract fresh investment without the pressure of creditor enforcement. The statutory architecture for this moratorium was added to IA 1986 by the Corporate Insolvency and Governance Act 2020 ( CIGA 2020), expedited in response to the coronavirus pandemic. An insolvency practitioner acts as ‘monitor’, supervising compliance, while the directors continue to manage day-to-day operations, albeit within...

rules on interpreting contracts (agreements) This Practice Note outlines the rules for construing contracts and their terms, reviewing leading cases— Rainy Sky v Kookmin, Arnold v Britton, and Wood v Capita—together with the principal canons of construction. It should be read alongside the Practice Notes: Contract interpretation—the guiding principles; and How to approach a contractual interpretation dispute—a practical guide. Lord Hoffmann’s five principles in ICS v West Bromwich Building Society (see Practice Note: Contract interpretation—the guiding principles) provide the central approach to interpretation, which is then supported by general rules or guidelines (often called canons of construction) used to help determine the meaning of a written agreement. This Practice Note examines the most significant of these, namely: the whole document is relevant commercial sense (business common sense) and avoiding an unreasonable outcome cutting down rights and remedies saving the...

A variation (often called a change) is any adjustment to the originally contracted scope of works—by adding, omitting or substituting elements, or by altering the method by which the works are carried out. Given the peculiarities of construction, variations assume particular significance. Parties cannot foresee every eventuality, and contracts are sometimes concluded before the design or scope is fully finalised, so alterations are frequently needed. Absent an instruction to vary, the contractor must deliver the works exactly as first specified; doing otherwise would amount to a breach. When the employer directs a departure, that change operates under the contract, not as an amendment to the contract itself. For advice on altering contractual terms, see Practice Note: Contract variation. For fuller treatment of the variation mechanisms in standard forms, see Practice Notes: JCT...

This Practice Note sets out the principal participants commonly found on construction schemes (such as the employer, the contractor, the professional consultant team—both design and non-design disciplines—together with sub-contractors and funders) and offers an overview of their respective functions and how they relate to each other, including the contracts that are put in place between them. For a visual depiction of how a development can be arranged and the contractual web between the parties, see: Structure of a development project—diagram. Employer The employer (also described as the client or developer) is the entity for whom the construction works are undertaken. Frequently, though not invariably, the employer also holds title to the land on which the works will be delivered. The employer will usually assemble a professional team, made up of various consultants, to assist in shaping the project brief and preparing designs etc. ahead of...

This Practice Note outlines the required contents of a Part 36 offer, identifies to whom the offer must be directed, and highlights the additional stipulations for a defendant’s Part 36 proposal. It also explains how to make a Part 36 offer confined to part of the claim or focused on a specific issue within the claim. The Note addresses offers in proceedings with multiple parties, the need for a relevant period of at least 21 days, and the treatment of interest. It further considers situations involving a litigant in person, as well as the inclusion of a non-monetary element within a Part 36 offer... What a Part 36 offer must include A compliant Part 36 offer does not have to be presented in a letter; a party may instead use Form N242A ( CPR PD 36, para 1.1)......

In construction, parent company guarantees ( PCGs) are routinely provided to the employer by a main contractor’s holding company, assuring the subsidiary contractor’s performance under the contract. Where a contractor has a parent, this is expected in virtually all building contracts, and is a standard requirement wherever group backing exists. Such arrangements are commonplace across the sector and are widely expected by employers where a parent exists. Most of the time, contractors must deliver a PCG, signed by their parent, when the contract is executed. This enables the employer to pursue the parent under the guarantee if the contractor fails to perform. PCGs also arise in other construction contexts. At times, under bespoke agreements, the guarantor is joined as a party to the contract solely to give the guarantee. On occasion, contractors are asked to grant lenders collateral warranties that include...

What is non-negligent damage? Where damage to neighbouring property stems from a contractor’s negligence or breach of contract, the contractor is liable in the tort of negligence or nuisance to the owner whose property is lost or damaged. See Practice Note: Negligence in construction. The adjoining owner may pursue either the contractor or the employer, as the party for whom the work is undertaken. The contractor must provide an indemnity to the employer against claims for property damage caused by the contractor’s negligence or breach of contract. If the employer is sued, it can seek an indemnity from the contractor for any damages awarded. Difficulties arise when damage to a neighbour’s property is not due to the contractor’s negligence or breach—non‑negligent damage. The issue first emerged in the 1958 case, Gold v Patman and Fotheringham, where the property adjoining the site of the works suffered damage caused by a...

This Practice Note explains the circumstances and methods by which parties may seek to limit or exclude liability for misrepresentation, by invoking section 3 of the Misrepresentation Act 1967 ( MA 1967) together with the section 11 reasonableness test under the Unfair Contract Terms Act 1977 ( UCTA 1977). Note: from 1 October 2015, UCTA 1977 applies only to business-to-business contracts; for consumer contracts, see sections 61–76 of the Consumer Rights Act 2015 ( CRA 2015). For guidance on rescission and damages arising from misrepresentation, see: Misrepresentation—damages as a remedy Misrepresentation—rescission as a remedy For related matters, including: Entire agreement clauses and their role in limiting or excluding liability for misrepresentation—see Practice Note: Contract interpretation—entire agreement clauses Non-reliance clauses used to exclude or limit liability for misrepresentation and the notion of ‘contractual estoppel’—see Practice Note: Contractual...

Materials, goods and workmanship Employers place significant emphasis on the contractor’s materials and craft on a build, since, alongside the design, they dictate the calibre of the finished scheme—and whether the contractor has achieved the stipulated level of workmanship, and/or selected materials that satisfy the contract’s quality criteria, is frequently at the heart of disputes about defective work and alleged shortfalls. The building contract typically sets out comprehensive clauses on workmanship benchmarks and on the categories and grades of goods and materials the employer requires the contractor to use on the project. While the technical documents attached to the building contract usually contain most of the particulars and prescriptions, the principal contractual terms commonly also address the employer’s expectations regarding materials and workmanship. As noted in this Practice Note, numerous express terms in a building contract (or a sub-contract to the primary building...

This Practice Note sets out targeted guidance on exclusions and caps on liability applicable to consultant appointments. It should be considered alongside Practice Note: Limiting liability in construction contracts, which contains fuller detail. Why consultants seek to limit their liability Professional consultants delivering design and/or other professional services on construction schemes will typically hold professional indemnity ( PI) insurance to protect them if they are sued for breaching a professional duty. Most professional appointments usually oblige consultants to procure and keep PI insurance in place. PI insurance safeguards not only the consultant, but also the employer, by ensuring there is a defined pot of funds, albeit from insurers, available to satisfy any claim against the consultant. For further detail on PI insurance, see Practice Note: Professional indemnity insurance in construction projects. However, PI cover is costly, and the limits purchased by many...

Scots contract law Although they have separate origins, Scots contract law has, in many respects, drawn closer to the English position. English-law notions such as undue influence and anticipatory breach have been taken into Scots contract law, and some leading authorities coincide across both systems. Nonetheless, there remain important differences that it is sensible to keep in view. The aim of this Practice Note is to point out some of the key differences between Scots and English contract law in these areas......

Contractor’s obligations in relation to time under the JCT 2011, 2016 and 2024 contracts This Practice Note reviews the Contractor’s time-related duties under the JCT 2011, 2016 and 2024 contracts. It addresses start on site matters, the requirement to proceed regularly and diligently, the Contractor’s programme, circumstances giving the Contractor a right to an extension of time (termed Relevant Events), acceleration, and the duty to finish by the Completion Date (including exposure to liquidated damages for delay). It cites clauses in the 2011, 2016 and 2024 editions of the JCT Standard Building Contract ( SBC) With Quantities and the JCT Design and Build Contract ( DB) 2024, while noting that equivalent provisions appear across the other JCT contracts as well......