CONTRACTS | DEFINING CONDITIONS On good terms Terms under which consultants and clients do business must be relevant, insurable and fair, says Rosemary Beales, of the Association for Consultancy and Engineering, who outlines the ingredients for a successful outcome D o you really know what you are signing up to when your proposal is accepted by a client? Has any agreement been signed? What terms and conditions cover the delivery of services, and are they clearly defined? These questions are fundamental for those offering consultancy services, regardless of their client. Whatever the value or complexity of the services commissioned and delivered, the business case for clarity on the proper allocation of risk and responsibility is irrefutable and working within a clear legal framework is part of this. The Association for Consultancy and Engineering (ACE) promotes the use of standard terms of engagement to assist the delivery of services and has highlighted the pitfalls inherent in many contractual terms, especially bespoke conditions. Even if the parties believe they understand what they have agreed to, it may if tested differ significantly from what they initially thought. This can prove costly financially and in terms of the relationship between consultant and client. The Supreme Court case MT Hojgaard A/S v E.On Climate and Renewables Robin Rigg [2017] held that an obligation contained in technical documents relating to the service life of certain foundations, which were part of the Employers Requirements and included a fitness for purpose obligation, had contractual effect. Despite the contractor exercising reasonable skill and care, as required by the contract, and complying with specified standards, the court held that there was a fitness for purpose obligation in relation to the foundations. Consistency and clarity across all documents are essential, and the whole contract must make the obligation clear. Standard terms can provide a sound basis, but extreme care must be taken to ensure any other documents forming part of the agreement do not conflict with the provisions of the standard terms. This is not always simple and advice needs to be taken if there is any concern, not least in relation to insurance. Malcolm Charles Contracts v Crispin [2014] (TCC) arose from an adjudication. The judge referred to the case of RTS v Molkerei Alois [2010] where it was emphasised that just because one party believed there was no binding contract, there was no guarantee a court would take the same view. If, on the basis of evidence, a reasonable person would consider the parties to be in agreement and intending to create a binding contract and there is sufficient certainty for the contract to be enforceable then a court can conclude that a contract exists. Despite the lack of execution, the course of interaction between the parties led the court to enforce the adjudicators decision in favour of the contractor. The case highlights the need for the proper execution of a contract that is both clear and unambiguous. For standard terms of engagement to remain relevant to the profession, they need to be kept up to date. In 2017, ACE published a new form of professional services agreement that can be used across the UK, a sub-consultancy agreement, and a schedules of services, ensuring industry professionals have access to terms and conditions suitable for todays world. Recognising new developments such as procurement legislation, technological advances and project management, often involving several parties the documents are clearly written and help everyone understand their roles and responsibilities. These schedules facilitate the use of BIM, offering a useful tool to all those delivering a wide range of services. They better provide for the identification of the services to be delivered, including additional services, and mirror the sequence of the RIBA Plan of Work, which is seen as beneficial by many users. With core and optional deliverables at the end of each work stage, the schedules offer welcome clarity and choice to all parties. The professional services agreement is designed to be user friendly and the guidance notes, while not a legal interpretation or part of the agreement, enable users to gain a broad understanding of its provisions, and assist in its completion. It includes a more balanced apportionment of risk, with consultants obligations, clients obligations and joint obligations clearly listed in sequence, rather than scattered throughout the agreement the objective being to allocate risk to the party best able to manage it. A limitation of liability clause is included, and there are clearer provisions for agreeing caps on liability. It is our hope that use of the ACE professional services agreement will give confidence to clients and consultants that the terms under which they do business are relevant, insurable, balanced and fair the essential ingredients for a successful outcome. The business case for clarity on the proper allocation of risk and responsibility is irrefutable ROSEMARY BEALES is contracts adviser at the Association for Consultancy and Engineering 18 May 2019 www.cibsejournal.com CIBSE May19 pp18 Rosemary Beales.indd 18 26/04/2019 16:59