Non-negligent E&O Limitations vs Betterment
Non-negligent E&O Limitations vs Betterment
(OP)
I'm trying to find either case studies or formal language that draws the line between a consulting engineers financial liability for non-negligent errors and omissions, and betterment of the project.
Simple case: Say I have a conflicting callout on the plan and profile for a specific catchbasin type. In construction, the RFI is made asking which one. I designate the correct type, which is of course the more expensive and not what was bid. The contractor submits a change order. The claim from the owner is, "you made an error, therefore you have to pay the difference in cost."
I can understand if demolition, re-construction, or contractor inflated the change-order cost, then I would be liable for that cost.
But if the structure has not been built yet, there is no reconstruction, no damages, no additional work and no markup on the change order since its a line item cost, then I should have zero financial liability. What the owner would be asking is for me to pay for betterment of the project.
I'm looking for a clear and simple defense to this claim. Any ideas? (yes I'll be talking to our E&O insurance guy again tomorrow) Thanks in advance..
Simple case: Say I have a conflicting callout on the plan and profile for a specific catchbasin type. In construction, the RFI is made asking which one. I designate the correct type, which is of course the more expensive and not what was bid. The contractor submits a change order. The claim from the owner is, "you made an error, therefore you have to pay the difference in cost."
I can understand if demolition, re-construction, or contractor inflated the change-order cost, then I would be liable for that cost.
But if the structure has not been built yet, there is no reconstruction, no damages, no additional work and no markup on the change order since its a line item cost, then I should have zero financial liability. What the owner would be asking is for me to pay for betterment of the project.
I'm looking for a clear and simple defense to this claim. Any ideas? (yes I'll be talking to our E&O insurance guy again tomorrow) Thanks in advance..





RE: Non-negligent E&O Limitations vs Betterment
"The Contractor <Construction Contractor> shall examine in detail all contract documents for errors, omissions and inconsistancies and shall perform a field investigation to verify and confirm the existance of all field conditions and existing constructions, as may be shown on the plans and drawings and within the specifications, or not. Contractor shall perform his examination of the documents and undertake and complete a field investigation prior to the commencement of construction and shall inform the owner, or his representative, of any such errors or omissions, deficiencies, inconsistancies, or contradictions between drawings, plans, specifications, construction contract and other relavent documents, and the actual conditions encountered in the field. Any and all such inconsistancies or conflicts shall be resolved by the Owner, or his duely appointed representative, whom shall have the final authority to resolve any and all such conflicts and inconsistancies in his sole interest. Failure by the contractor to confirm and verify conditions in the field and existing constructions, above or below ground, or failure to report any such conflicts and inconsistancies between the field conditions, the plans, the specifications, the construction contract, or other documents relavent to this contract, to the Owner, or his duely appointed representative, in writing, before <such and such date, time of construction, mobilization, 30 days in advance of, etc.> shall not form, nor be construed in any manner, to constitute grounds for any extra payments to be made to Contractor at a later date.
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
RE: Non-negligent E&O Limitations vs Betterment
RE: Non-negligent E&O Limitations vs Betterment
...just some ideas...
RE: Non-negligent E&O Limitations vs Betterment
I'm concerned that being soft at this stage will open us up for more claims. Our response basically denied acceptance to anything. If anyone is interested, I can post the meat of the letter, with names altered of course.
I did find a little legal language to toss in, but not a formal definition. We intend to look into our contract language and potentially include stronger language defining the industry standard of care and protectection from claims that reflect betterment to the project.
RE: Non-negligent E&O Limitations vs Betterment
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
Unfortunatly, I don't have this languge to fall back on. And this is probebly an odd case where a client is going to loose money on the development and therefore is making any claim he can to reduce his loss, like going after the engineer.
Just another challenging situation.. It's true that we learn from our mistakes.. and I'm learning alot these days...
thanks everyone for your comments..
RE: Non-negligent E&O Limitations vs Betterment
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
The situation would be different if the basin was already in place or ordered. The water can get very muddy here.
Hope this helps.
RE: Non-negligent E&O Limitations vs Betterment
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
If there is no negligence, it's your professional judgment and opinion. Nothing wrong with that even if it differs from someone else's.
As long as you comply with your local standard of care in such decisions, your liability should be negated or very nearly so.
RE: Non-negligent E&O Limitations vs Betterment
There was a case in Vancouver, British Columbia, Canada where the foundation contractor was given the opportunity to submit a change to the foundation in his bid. The proposed change wasn't acceptable to the EOR without modification and the foundation contractor sued for the difference... the engineering consultant was on the hook. The case went through to the Supreme Court for a final ruling (not sure if BC Supreme Court or Supreme Court of Canada).
With ambiguities in construction documents, the courts in these environs generally rule against the person who crafted the documents (almost a rule).
RE: Non-negligent E&O Limitations vs Betterment
Dik
RE: Non-negligent E&O Limitations vs Betterment
If an owner could pursue an engineer for change orders such as this, no engineer would take up work. Every owner in the land would pursue the engineers for every little error and conflict. Lord knows I have wanted to in the past, but again no set of drawings are perfect. And when you have a case where the work has not commenced, such as this, the owner would have surely paid for the higher cost of the item. The issue at hand is that the item would be part of the original bid or part of a change order.
I agree that the burden lays with the drafter of the documents. But I think the owner is just trying to get the engineer to pay for a product he would have bought anyway.
RE: Non-negligent E&O Limitations vs Betterment
Do you have a suggestion for improving it?
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
Mike Halloran
Pembroke Pines, FL, USA
RE: Non-negligent E&O Limitations vs Betterment
Biginch... I'll sit down and see what mods I can make... different focus in that depending on the circumstances, it's unreasonable to place the burden of unknown site conditions on the contractor. There is a fair amount of case law on this... and the practice generates more case law... I know that this is often done, and that there are often many 'weasle' clauses trying to pin the tail on the contractor; sometimes they don't hold up. Also a problem if the part of the documents can be shown to be unreasonable, then adds credence to other portions being unreasonable.
RE: Non-negligent E&O Limitations vs Betterment
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
This should be done by the owner... prior to tendering or alternatively can be made part of the work to be undertaken by the contractor. If it is an issue, or can have an impact on the project it should be investigated by the consultant or owner. If it is something obscured by earth, etc. that may have an impact on the project, then unless the owner is prepared to pay for the investigation, it is unreasonable for the burden of this to be placed on the contractor.
"Any and all such inconsistancies or conflicts shall be resolved by the Owner... whom shall have the final authority to resolve any and all such conflicts and inconsistancies in his sole interest."
This, IMHO, is unreasonable and likely unenforceable... it also can lead to bad case law...
"Failure by the contractor to confirm and verify conditions in the field and existing constructions, above or below ground, or failure to report any such conflicts and inconsistancies between the field conditions, the plans, the specifications, the construction contract, or other documents relavent to this contract, to the Owner, in writing shall not... constitute grounds for any extra payments to be made to Contractor at a later date."
With latent problems this is also unreasonable and likely unenforceable... This may not be consistent with the project schedule... ditto.
just some ramblings... with larger projects, I generally ask that the owner has his solicitor review the tender documents prior to issue... just to cover my *ss.
Dik
RE: Non-negligent E&O Limitations vs Betterment
I agree the "sole interest" could be a bit of a problem.
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com
RE: Non-negligent E&O Limitations vs Betterment
Dik
RE: Non-negligent E&O Limitations vs Betterment
BigInch
-born in the trenches.
http://virtualpipeline.spaces.msn.com