Contracts: Think you know the risks? Think Again

(PHOTO: Adobe Stock/Andrey Popov)

The High Court of Justice recently issued a judgement on a dispute between developer BNP Paribas, the claimant, and contractor Briggs & Forrester, the defendant, which had resulted in the contractor terminating its services amid a disagreement over the scope of works.

What the contractor tendered for

The scope of works included stair pressurisation works which allow for the supply of pressurised air into the stair cores to enable them to be used as fire-escapes and fire-fighting routes.

The works involved the removal of an existing system and its replacement. Both the developer and the tenderers knew that there was some asbestos-containing material within the stairwells.

A report from the developer advised the tenderers that there were asbestos-containing materials within the stairwells, but that their extent would only be known once the successful contractor had carried out their own surveys.

The project was tendered on a lump sum basis – which essentially means that the contractor is responsible for carrying out the whole of the scope for its initial price.

What was in the contract? The killer clauses

The contract (which was an amended standard form known as JCT Design and Build 2016) included some bespoke provisions dealing with the refurbishment works:

‘Design Duty Passed Down’
The contractor accepts full design responsibility including for items in the developer’s requirements; the developer would accept no such responsibility.

‘You Knew the Site (Whether You Did or Not)’
The contractor has full knowledge of the site conditions and cannot rely on any surveys disclosed by the developer; it was also its responsibility to undertake its own investigations or to verify any existing information.

‘Asbestos? All Yours’
The contractor is responsible for ensuring the works comply with statutory regulations and relevant codes of practice in relation to asbestos.

Who took the fall – and why

The court said that it was ‘plain beyond serious argument’ that the risks for design and asbestos lay firmly with the contractor. The contractor’s acceptance of all site conditions – known and, as yet, unknown – meant that the hidden structural faults were also their responsibility.

Accordingly, when further asbestos and the structural faults were discovered, these were wholly the contractor’s responsibility to resolve, for the contract price previously agreed.

The judge said he was prepared to accept that the contractor was ‘acting under a misapprehension... as to the effect of the contract’. Under English law (on which the decision was based), the court interprets contracts objectively; it decides from the words alone what the parties agreed and is not influenced by what the parties thought the contract meant.

In many jurisdictions, courts will not let you escape a bad bargain if you signed it knowingly.

Don’t let this be you

Courts have always been loath to rewrite contracts just because one side made a bad deal. This case is a sharp reminder: if you take on a job without checking what the contract actually says, you might be signing away your right to recover your costs when things go wrong.

Yes, some contracts are complex; yes, you might need legal help to understand them. But blindly signing on the dotted line is not a defence. If the risks are buried in the small print, dig them out before they bury you.

No contract is too short to check or too long to question. However much it costs to get the right advice, it’s nothing compared to the price of getting it wrong.

For the details: BNP Paribas Depository Services Ltd & Anor v Briggs & Forrester Engineering Services Ltd [2024] EWHC 2903 (TCC)

About the author Based in the UK, Sarah Fox is a contract expert with over 30 years’ experience in the construction and engineering sectors. A former lawyer, she works with both UK and international clients and is an associate lecturer at the University of Salford. Sarah specialises in creating concise, user-friendly contracts that promote clarity and reduce disputes. She is also the author of several books on construction law, including the ground-breaking industry title Small Works Contracts in Just 500 Words.