There has been a recent court case brought to my attention by the NSPE. A contractor was financially penalized due to late completion of a project. He then sued the engineer of the project, claiming that the project was late due to errors on the part of the engineer. The contractor is looking to recover the money that he lost. The engineer is claiming that he is not responsible for "incidental" damages (ie...the penalty assigned by the owner to the contractor). A lower court has ruled in favor of the contractor, but the case is now in the hands of an upper court. What do the other readers of this forum think? Should an engineer be responsible for "incidental" damages?
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Limit Of Engineer's Liability 2
- Thread starter EddyC
- Start date
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1
- #3
The engineer should be liable for any delays and costs incurred as a result of his errors. Late completion claims are the most difficult to fight since late completion can be due to numerous factors.
He may not be responsible under contract to the contractor since he did not have a direct contract with the construction contactor, he could be liable under tort.
Most jurisdictions do not allow penalty clause in contracts. (You may have to have a bonus clause in the contract for early completion to get a penalty clause to stand.) They only allow damages for late completion. These damages can be actual damages or liquidated damages, which are simply an estimate of the damages. If the estimate is not a reasonable estimate, based on the knowledge of damages at the time, the courts may throw out the liquidated damages clause as a penalty clause. Therefore the contractor should not have been penalized for late completion.
The engineer may be liable for actual damages suffered by the contractor as a result of his errors. The standard of performance is not the highest standard of engineering services but what was a reasonable performance of professional skill.
If the engineer’s errors did in fact cause the late completion the owner could also sue the engineer for the costs of the delays.
Proper contract language is the best defence.
Of course I am not a lawyer so what do I know about law. The contractor could be simply following the tactic “sue them all and let the judge sort it out”.
Rick Kitson MBA P.Eng
Construction Project Management
From conception to completion
He may not be responsible under contract to the contractor since he did not have a direct contract with the construction contactor, he could be liable under tort.
Most jurisdictions do not allow penalty clause in contracts. (You may have to have a bonus clause in the contract for early completion to get a penalty clause to stand.) They only allow damages for late completion. These damages can be actual damages or liquidated damages, which are simply an estimate of the damages. If the estimate is not a reasonable estimate, based on the knowledge of damages at the time, the courts may throw out the liquidated damages clause as a penalty clause. Therefore the contractor should not have been penalized for late completion.
The engineer may be liable for actual damages suffered by the contractor as a result of his errors. The standard of performance is not the highest standard of engineering services but what was a reasonable performance of professional skill.
If the engineer’s errors did in fact cause the late completion the owner could also sue the engineer for the costs of the delays.
Proper contract language is the best defence.
Of course I am not a lawyer so what do I know about law. The contractor could be simply following the tactic “sue them all and let the judge sort it out”.
Rick Kitson MBA P.Eng
Construction Project Management
From conception to completion
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1
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CanEngJohn
Automotive
Wow. This could get ugly.
Reasonable doubt. Hmm all I would ahve to prove is that the contractor made eorrors which also resulted in delays. Then since you cannot demonstrate which errors resulted in the delays then it is difficult to recoup full penalty costs. And that is just the starters. If the Engineer has solid records for the communication on each error you then could evaluate contractor response (eg. did he delay for two weeks in ordering the new supplies to save a buck?) for reasonableness in avoiding the delays etc etc etc ...
RDK hits the nail on the head though. The contract language is going to be paramount. Not to worry though this is going to be a feast for the lawyers and I doubt this case is not going to be appealed at least 3 times.
I chaulk this up to a very good example of why you should keep very good care of your documents and communication. There could be some validity to the case but without details and understanding the standards of performace considered normal in this type of contract it is difficult to make a judgement call.
I would argue that an Engineer should be responsible for his work. Liability I believe should increase as each of the following statements is determined to be true.
1/ the Engineer did make errors that should not have occurred (performance below norm)
2/ which can be directly linked to the resulting delays
3/ the timeline was known in advance (Engineer or contractor allowed time for errors or not)
4/ the responses to the errors were not expedient
5/ Contractor showed reasonable effort in trying to overcome the resulting delays
Reasonable doubt. Hmm all I would ahve to prove is that the contractor made eorrors which also resulted in delays. Then since you cannot demonstrate which errors resulted in the delays then it is difficult to recoup full penalty costs. And that is just the starters. If the Engineer has solid records for the communication on each error you then could evaluate contractor response (eg. did he delay for two weeks in ordering the new supplies to save a buck?) for reasonableness in avoiding the delays etc etc etc ...
RDK hits the nail on the head though. The contract language is going to be paramount. Not to worry though this is going to be a feast for the lawyers and I doubt this case is not going to be appealed at least 3 times.
I chaulk this up to a very good example of why you should keep very good care of your documents and communication. There could be some validity to the case but without details and understanding the standards of performace considered normal in this type of contract it is difficult to make a judgement call.
I would argue that an Engineer should be responsible for his work. Liability I believe should increase as each of the following statements is determined to be true.
1/ the Engineer did make errors that should not have occurred (performance below norm)
2/ which can be directly linked to the resulting delays
3/ the timeline was known in advance (Engineer or contractor allowed time for errors or not)
4/ the responses to the errors were not expedient
5/ Contractor showed reasonable effort in trying to overcome the resulting delays
This case points to the desirability of having contract terms agreed, between the engineer and the client, at the start. Having a Standard Terms and Conditions that absolves either party from consequential damages probably would have stopped this in its tracks. The other very important point, as pointed out by CanEngJohn, is keeping a good record of project documents. Engineers can be quite lax in this. Some written documentation can make all the difference in a legal case; as an expert you can end up searching through massive piles of documents, looking for some document that makes a key point.
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