CONSTRUCTION LAW

Architect and
Construction
Contracts.

the

Zulhabri Ismail

Department of Construction Management

Faculty of Architecture Planning and Surveying
Universiti Teknologi MARA

Synopsis
The purpose of this lecture is to discuss the roles,
obligations and liability of the architects under PAM
2006 and common law.

Architect
Roles
and Obligations
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The Architect

The Architect and the Builder

A. NOT A PARTY TO A CONTRACT

Not a party to a contract.

Liable to the contractor in Tort but not in
Contract.
The contract merely clarifies.

the duties.
delimit the authorities.
delimit the area in which the architect is acting as an
agent.

Kecuaian oleh ahli-ahli professional

(AAH, 2000)
Terdapat dua jenis kecuaian: Kecuaian akibat pernyataan silap: Hedley Byrne
& Co v Heller & Partners (1964).
Kecuaian dalam perlaksanaan tugas-tugas lain,
selain nasihat: Sutcliffe v Thackrah (1974).

Hedley Byrne & Co v Heller & Partner

(1964)
Facts
An advertising company (A) was approached with a
view to preparing a campaign for a small company,
Easipower (E), with whom they had not previously
dealt.
A then approached Es bank (B) for credit reference.
B gave a satisfactory reference without checking on
the current financial standing and the A produced the
campaign.
E went into liquidation, A sued B for negligent.

Hedley Byrne & Co v Heller & Partner

(1964)
Held

B was held responsible but the action was failed

due to disclaimer of liability in the credit
reference.
HL accepted Lord Dennings dissenting judgment
held that the action should be possible and was
accepted as law.

B. THE ARCHITECT AS AN AGENT OF

THE EMPLOYER

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A specialist exercising special skills independently.

As a agent for the employer.
Chambers v Goldthorpe [1901] 1 KB 624.
Sutcliffe v Chippendale & Edmondson (1971) 18 BLR
149.
Sutcliffe v Thackrah [1974] AC727.
Rees & Kirby Ltd v Swansea CC (1985) 30 BLR 1.
Wessex RHA v HLM Design Ltd [1994] CILL 991.

Chambers v Goldthorpe [1901] 1 KB 624

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The Contract Administrator should enjoy the same

immunity of a judge?
Acting in a quasi-judicial [decision making in a
judicial manner] capacity.
Court of Appeal states that the principle that a
contract administrator could not be sued in
negligence by the employer.
The principles stated in Chambers was overturned
by the House of Lords in Sutcliffe v Thackrah
[1974].

Sutcliffe v Chippendale & Edmondson

(1971) 18 BLR 149.

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The trial judge in this case is considerable interest

in examining the practical implications of a duty
of care in respect of certification.
It appears that the contract administrator must
notify the quantity surveyor in advance of any
work regarded as not properly executed, so that it
can be excluded from the quantity surveyors
valuation.

Sutcliffe v Thackrah [1974] AC 727

Fact
In Sutcliffe the architect over-valued a series of
certificates and the employer duly paid the
contractor.
The contractor then went into liquidation / winding
up before the job was completed.
As the result the employer could not recover the
money that had been overpaid.
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Sutcliffe v Thackrah [1974] AC 727

Held [House of Lords]
The architect / contract
was not acting in a
quasi-judicial capacity and had no immunity
form liability.
The architect was liable to compensate the
employer for the money lost.

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Rees & Kirby Ltd v Swansea CC (1985) 30

BLR 1

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The exercise of his professional skill and duties is

sufficiently linked to the conduct and attitude of
the employers.
Employers will be liable for the default done by
contract administrator [principle of vicarious
liability?]

Wessex RHA v HLM Design Ltd [1994]

CILL 991.

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The architect / contract administrator owes the

duty of care to the employer / any parties for his
decision making.
Liability may arise where a contract
administrator, by negligently granting E.O.T to
which a contractor is not entitled, causes the
employer to forfeit liquidated damages.

So, the Architect cannot make

mistake

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Vicarious Liability
The government / employer who refuses to allow
the architect / contract administrator to certify claim
until the treasury has approved the payment of a
claim or V.O may be vicarious liable.

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Authority under the contract

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The authority of the contract architect / contract

administrator expressly stated in the contract.
Not to seek consent from the employer.
The employer will be estopped from denying.

C. ARCHITECTS DUTIES

Site inspection

Design

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Not rely on others.

Accountable to the employer for the design &

suitability even do done by him.

C. ARCHITECTS DUTIES

Delivery of drawings and instructions on time.

Supervision

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Within reasonable time.

Late instructions may give rise to E.O.T and loss and / or
expense.

Not required to be constantly on site.

Must see major aspects of the works are properly executed.
Need not to attend to every detail.

Not required to be constantly

on site

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C. ARCHITECTS DUTIES

Certifications
Must be fair and impartial.
Owes duty of care: Sutcliffe v Thackrah [1974]

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Duties to the employer

Pre-contract stage
Responsible for overall design: Moresk Cleaners Ltd
v Hicks (1966) 4 BLR 50; Merton LBC v Lowe (1981)
18 BLR 130; Pratt v George J Hill Associates (1987)
38 BLR 25.

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To prepare skillful and economic designs for the

works commissioned.

Responsible for overall design

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Skillful and economic designs

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Duties to the employer

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Pre-contract stage (Contd)

The best interest of employer: Pratt v George J
Hill Associates (1987) 38 BLR 25.
Acting as an independent contractor for the
employer.
Not for employee architect i.e. contract of service:
Ready Mixed Concrete (South East) v Minister of
Pensions and National Insurance [1968] 2 Q.B.
497).

Moresk Cleaners Ltd v Hicks (1966) 4 BLR

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In Moresk, it was held that architect was liable for delegate
his task in respect of design.
The court held that an architect who lacks the ability or
expertise to carry out part of a design job has three choices:
To

refuse the commission altogether.

To persuade the employer to employ a specialist for that
part of work.
To employ and pay for a specialist personally, knowing
that any liability for defective design can then be passed
along the chain of contract.

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Ready Mixed Concrete (South East) v Minister of

Pensions and National Insurance [1968] 2 Q.B. 497
In order that a contract of service exist, the following three conditions must
be satisfied:

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the employee agrees that, in consideration of a wage or other

remuneration, he will provide his own work and skill in the performance
of some service for his employer;

he agrees, expressly or impliedly, that in the performance of that service,

he will be subject to the others control in a sufficient degree to make
that other employer;

The other provisions of the contract are consistent with its being a
contract of service (for example, the employer provides the tools and
materials for use by the employee in his work).

Merton LBC v Lowe (1981) 18 BLR 130

The CA held that

In relation to the work allotted to the expert, the
architects legal responsibility will normally be
confined to directing and coordinating the experts
work in the whole.

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Merton LBC v Lowe (1981) 18 BLR 130

Howeverif any danger or problem arises in connection

with work allotted to the expert, of which an architect of
ordinary competence reasonably ought to be aware and
reasonably could be expected to warn the client, despite
the employment of an expert, and despite what the expert
says or does it, it isthe duty of the architect to warn the
client. In such a contingency he is not entitled to rely
blindly on the expert, with no mind of his own, on matters
which must or should have been apparent to him.

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Pratt v George J Hill Associates (1987) 38

BLR 25.
In Pratt, a contractor who was strongly
recommended by the defendant architects
proved to be highly unsuitable. He became
insolvent [bankruptcy (company)] leaving a trial of
defective work.

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It was held that the defendants architects were

liable to the client for the money she was unable
to recoup from the builder.

Duties to the employer

Contract / construction stage
Perform duties in the best interest of the owner.
Perform functions as an agent of the employer.
Performing the functions of a contract
administrator.
Dual liability owed duty in both contract and
tort.
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Duties to the employer

Agent?
A person employed to act on behalf of another.
An act of an agent, done within the scope of his
authority, binds his principal.

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Townsends (Builders) v Cinema News

Property Management [1959] 1 All ER 7
The contractor had been liable to the employer for
certain breaches of statute (installation of toilets in
contravention of a by-law).

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The CA held that, since the architect had led the

contractor to rely on him and ensure compliance
with the by-laws, the contractor was entitled to
recover from the architect the damages that he
had to pay the employer.

BL Holdings Ltd v Robert J Wood &

Partners (1979) 12 BLR 1
As with other professional, he will be expected to
keep abreast of development in law, including
recent legislation and court decisions, and will be
liable to damages for negligence to his employer if
he does not do so.

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In particular, the architect / contract

administrator will be expected to have detailed
and expert knowledge of the PAM form
/standard form of contract if that is used.

Architect to make decision

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Clause 1.1 and 1.2, Materials and workmanship,

clause 6.1 Standard of works.

Clause 1.3 Contractors design.

Clause 14.1 Removal of unfixed materials.

Architect to make decision (Contd)

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Clause 21.1 Extension of time (late site

possession).
Clause 23.3 Insufficient particulars for EOT.
Clause 23.9 Extension of time (relevant events).
Clause 24.4 Loss and / or expense.
Clause 25.2 Notification of default by contractor.

Architect to certify
Clause 15.2 Certificate of practical completion
Clause 15.6 Certificate of completion of making good
defects
Clause 16.1 (i)(a) Certificate of approximate value of partial
possession by employer

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Clause 16.1(e) Certificate of completion of making good

defects of the relevant part (partial possession by employer)

Architect to certify (Contd)

Clause 22.1 Certificate of Non Completion
Clause 23.4 Certificate of EOT
Clause 30.1 Interim certificate
Clause 30.6(c) and (d) Certificate for the release of retention fund
Clause 30.13 Penultimate certificate
Clause 30.14 Final certificate

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Architect to issue instructions

Clause 1.4 Discrepancies and divergence in the documents.
Clause 2.0 Architects instructions [Provisions / Mechanism].
Clause 3.4 Drawings and details amplifying and explaining
the contract work.
Clause 4.3 Divergence between contract drawings and
specification and statutory obligations and by-laws.

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Clause 5.1 No rectification of errors (setting out).

Architect to issue instructions (Contd)

Clause 6.3 Open up for inspection any work covered up and
arrange for testing.
Clause 6.5 Demolition, reconstruction and removal of works
not in accordance with the contract.
Clause 7.2 Contractor to indemnify the employer for
infringed intellectual property rights.
Clause 8.3 Instruction to remove Site Agent/contractors
employee(s).

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Architect to issue instructions (Contd)

Clause 10.2 Site staff (employers representative) directions.
Clause 11.2 & 11.3 Variation order at anytime before CPC.
Clause 11.4 Expenditure of Prime Cost and Provisional
Sums.
Clause 15.5 Rectification of defects during defects liability
period.

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Architect to issue instructions (Contd)

Clause 16.3 Contractor to remove equipment.
Clause 21.4 AI regarding postponement or suspension of the
works.
Clause 23.4 AI for insufficient information for EOT.
Clause 25.2 notice specifying default prior to determination.
Clause 27.1 & 28.1 AI for expenditure of Prime Cost Sum
and Provisional Sum.

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Instructions by the S.O

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PAM 1998/2006, clause 2.0

CIDB 2000 Edition, clause 3
PWD Form 203A, clause 5

Instructions by the S.O

Quiz
Written v unwritten instructions: Pro & Con

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Architects written instructions (PAM

2006)
Breach of
contract?

A issues written instruction

[2.1]

A x specify
C complies

Options

C does not
comply

C requests A to
specify clause [2.3]

Options
A specify in
writing
Options

After 7 days from

C receipt of notice,
E may request
others to carry out
[2.4]

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C complies

Arbitration
and
adjudication
[2.4]

Architects oral instructions (PAM

1998)
A issues an oral
instruction [2.5]
C complies

Options

A may confirm
instruction
prior final
certificate
[2.5(iii)]

C ignore
No action until
instruction in
writing
A issues written
instruction in 7
days [2.5(i)]

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C confirms in
writing 7 days [2.5]

Options

A rejects

No reply within 7
days

No further
action

Confirmation has
the same effect as a
written instruction

Tutorial
What are the roles and obligations of the contractors
under PAM contract 2006 (with quantities)?

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GROUP DISCUSSION
CONTRACT ADMINISTRATION
Company Z is a G7 construction organization.
Under the 9th Malaysia plan the company is
able to secure some building projects and
the standard form that will be used is
PAM2006. As a Project Manager for the
company in question, you are about to
initiate and keep the project running. Explain
the process of contract administration under
PAM2006 that you should be familiar with.
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Conclusion

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Thank you

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