The CIC Consultants’ Contract

New contract form and issues for clients

The Construction Industry Council (“CIC”) has published a standard form for the appointment of consultants on major construction projects called the Consultants’ Contract. The CIC has endeavoured to produce a form of appointment which, it states, “...strikes a fair balance between the interests of the clients and consultants”.

This review highlights a number of issues for a client to be aware of in the event that the CIC Contract is to be adopted.

Who controls the brief?

The CIC Contract provides for there to be two briefs: the client brief (produced by the client, setting out its requirements and priorities for the project and incorporating a “master programme” for the project) and the project brief. The project brief is a brief which is “progressively developed and agreed by the project team and the client”.

The consultant is only obliged to have “due regard” to the client brief and the master programme. This lack of clarity as to what standard “due regard” is could lead to difficulties, with the client expecting the consultant to act in accordance with its brief but the consultant simply using it as a guidance document.

• Clients might want the contract to be amended to ensure that sufficient regard is given to their instructions.

The Master programme and Warranties – a one-sided obligation?

The consultant is, as with the client brief, obliged to have “due regard” to the master programme. The client, however, is under an absolute obligation to provide information in accordance with it and within the time frames set out under it. Furthermore, the client is required to warrant the accuracy of the client brief, any other information provided by the client from its own knowledge and any specialist reports and surveys the client supplies which it is reasonable for the consultant to rely on in performing its services.

In contrast to these onerous obligations, the consultant does not give any warranties under the CIC Contract. Accordingly, if a client subsequently provides the original report to another consultant for them to rely on, the client is obliged to warrant the accuracy of that report while not having the benefit of any such warranty from the original report producer!

• Clients should seek to limit the warranties that they are obliged to give so that they are “to the best of their knowledge and belief” and have the consultants provide a similar warranty in relation to the accuracy of any reports, surveys or information that they provide.

Responsibility only for own work

Under the CIC Contract, the consultant is not liable for defects, omissions, inadequacy in design, work or information prepared by others or for any other default on the part of others:

“...except to the extent that the services expressly oblige the consultant to review or inspect such designs, work and/or information”.

• Clients should seek to impose an obligation on the consultant to advise the client in the event of becoming aware of defects in another consultant’s work.

Limits on liability

The CIC Contract contains a provision limiting the consultant’s liability to a figure as set out in the contract.

• This is unlikely to be greeted with particular enthusiasm by clients and will probably result in substantial figures (at least to the limit of the consultant’s insurance) being inserted in the operative clause.

There is no net contribution clause in the CIC Contract. This is a potential exposure for the consultant more than for the client. The notes to the CIC Contract, however, recommend that a net contribution clause should be included in the contract, thereby leaving the position for the parties to negotiate as they think fit.

Termination

Under the CIC Contract, the client is entitled to terminate the consultant’s contract at will (subject to adequate notice). The consultant is not entitled to seek loss of profit in the event of such termination. The consultant is, in turn, entitled to terminate in the event of a material breach by the client of any of its obligations under the contract which are not rectified within 28 days of notice of the breach being given.

• The client needs to be aware that if this provision remains within the final form of contract, the client must remedy any breaches within the 28 day period following notice of the breach from the consultant, failing which the consultant will be able to terminate.

Additional Consultants’ Fees

If a consultant intends to claim additional fees, it is a condition precedent to any such entitlement that the client is notified in writing of the intention to make such a claim and with an estimate of the additional cost.

• The consultant is entitled to additional fees if it is delayed or disrupted in its works under the contract by matters outside its control. As there is no distinction in the contract between client delays and disruption and those for which neither the consultant nor the client is responsible, the client bears the risk of additional fees resulting from delays and disruption arising from neutral events – an onerous obligation and one which should be guarded against.

Summary

In standard form, there are some very obvious areas of the CIC Contract which both client and consultant will want to revise and address. Bearing in mind, however, that it is designed to be used on major projects, it is likely that clients will be making the election as to whether or not to adopt it as a starting point.
They might take some comfort from the higher than normal standard of care which the consultant is obliged to adhere to (namely to exercise reasonable skill, care and diligence as expected of a competent consultant of the relevant discipline who is experienced in providing similar services in relation to projects of a similar size, scope and complexity to the project), but similarly may be concerned by a contract which includes as a standard provision that the consultant’s liability should be limited.

For further information, please contact Chris Fellowes or Steven Mash.