NZACS Documents Flashcards
What is the Negligent test?
- Was a duty of care owed to the claimant? (Class of person)
- Was that duty breached?
- Did the claimant suffer a loss?
- Was the loss caused by the alleged negligent act or omission?
- Could the loss have been reasonably forseeable?
- Did the claimant contribute to their loss?
- Are there any statutory defenses? (Limitation. Statute)
What are the defences for Negligence?
- Are there any statutory defenses? (Limitation.Statute)
- No duty of care owed to claimant
- No negligence
- Claimant did not suffer loss claimed
- No causal relationship between alleged negligent’act/omission & loss .* Contractual limit of liability (Time and quantum)
- Statutory limitations apply
- Claimant contributed to their own losses (Contributary negligence)
Claims Made Policy VS Occurance Based Policy?
Claims made policy:
Responds to knowledge of event notified during term of policy
eg PI Insurance
Occurance based policy:
Responds to event which occurs during term of policy
General/Life Insurance
I think also public liability
A claims-based policy covers claims made during the policy period, regardless of when the incident occurred.
Whereas an occurrence-based policy covers incidents that occur during the policy period, regardless of when the claim is made.
So, with a claims-based policy, it’s all about when the claim is filed, while with an occurrence-based policy, it’s about when the incident happened.
“Arising out of” or “arising from” or “in
connection with”
Words to be avoided in any contract of engagement if followed by the words “the professional services” or “breach of the contract” or similar.
These words make a looser connection with the breach and loss
The preferable words in substitution would be “to the extent caused by”. As an example: “Where the architect breaches this agreement the architect is liable to the client for reasonably foreseeable damages to the extent caused by the breach.”
What is conttract works insurance?
Contract works insurance is defined as indemnifying the policyholder(s) for sudden, unforeseen and unintended physical damage or loss to the contract works during the period of insurance.
This typically excludes faulty workmanship but can be extended to include damage caused by natural hazards, such as earthquakes.
Words and phrases to be wary of
Careful word selection is crucial in contracts as they serve as records of agreements. Architects should exercise caution when using extreme adjectives such as “all,” “every,” “best,” “highest”, or similar terms in their contracts. For instance, stating “the Member will provide its services to the highest possible standard” sets a standard higher than what would typically apply at common law.
Words like “arising out of” in liability clauses of a contract of engagement, especially when followed by “the professional services” or “breach of the contract,” should be avoided. Such wording changes the common law test, which requires the breach of contract to directly cause the loss. Instead, it establishes a looser connection between the breach and the loss, potentially extending the member’s exposure.
A preferable alternative could be using the phrase “to the extent caused by.” For example: “Where the consultant breaches this agreement, the consultant is liable to the Client for reasonably foreseeable damages to the extent caused by the breach.”
What are damages in the context of a civil action, and how can the reference to damages in a contract affect an architect’s liability? Why should you be wary of the word “Damages”?
Definition of Damages: Damages refer to the monetary award granted by a judge in a civil action as compensation for losses suffered by the plaintiff.
Contractual Liability: In a contract of engagement, referencing the architect’s liability for “claims, damages, liabilities, losses, or expenses” can extend beyond common law. Clauses demanding payment of legal costs “on a solicitor-client basis” go beyond the common law standard of approximately 50% of actual costs.
Risk of Non-Insurability: Such clauses may introduce elements that are not insurable, posing a risk to the architect. Replacing them with terms like “any reasonably foreseeable claim, damage, liability, loss, or expense” aligns with industry standards and can be a prudent approach.
What is a Deed of Continuity in the context of architectural contracts, and what precautions should architects take when dealing with such deeds?
Definition: A Deed of Continuity is a legal document that may be requested when a client, acting as the principal, seeks assurance from an architect or sub-consultant to complete services in case of termination of a main consultancy agreement or a design/build agreement.
Precautions for Architects:
Scope and Liability: Architects should ensure that terms in the Deed of Continuity do not extend liability or the scope of work beyond the original contract of engagement.
Standards of Care: There should be no inclusion of higher standards of care or warranties in the Deed of Continuity than what was specified in the original contract.
Limitations: Architects must confirm that any limitations on liability within the original contract of engagement are maintained in the Deed of Continuity.
What is a Duty of Care Deed in the context of architectural contracts, and what precautions should architects take when dealing with such deeds?
- Definition: A Duty of Care Deed is a legal document that a principal may require a contractor (under a design and build contract) or an architect to procure from a sub-consultant for the benefit of the principal. It outlines the duty of care owed to specific parties, such as financiers or future tenants.
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Precautions for Architects:
- Scope and Liability: Architects should ensure that terms in the Duty of Care Deed do not extend liability or the scope of work beyond the original contract of engagement.
- Standards of Care: There should be no inclusion of higher standards of care or warranties in the Duty of Care Deed than what was specified in the original contract.
- Limitations: Architects must confirm that any limitations on liability within the original contract of engagement are maintained in the Duty of Care Deed.
Why should you be careful of the work “Ensure”?
“To make certain”. A word to be avoided in any contract of engagement as it may be synonymous with a performance guarantee. Replace with “take all reasonable steps to ensure…”
Why should you be careful of the word “Indemnity” in some contracts?
A contract containing a broad form indemnity clause means that one party agrees to indemnify the other party from any losses. In the context of a contract of engagement, a broad form indemnity clause might obligate the Architect to cover the Client’s costs, even if the issue is caused by the Client. This can result in a contractual liability that is uninsurable. For more details, refer to the section above (pages 6 and 7).
Why should you be careful of the word “Guarantee” in some contracts?
A binding promise to be answerable for the debt or obligation of another, known as a guarantee, should be avoided in any contract of engagement as it is likely to be uninsurable.
Why should you be careful of the word “Must” in some contracts?
“To be obliged to” or “to be certain to”. A word to be avoided in any contract of engagement as it may be synonymous with a performance guarantee and may be uninsured (unless the phrase is “must use reasonable skill, care and diligence in performing…”.
What factor of Novation should you be careful of in regards to Liability?
Novation refers to the assignment of a contract of engagement from one of the original parties to another, commonly seen from a client to a contractor in design and build construction contracts.
Members should be cautious to prevent terms in a deed of novation that extend liability or the scope of work beyond the original contract of engagement.
Additionally, they should ensure that there are no higher standards of care or warranties and that the limitations within the original contract of engagement are preserved in the deed of novation.
Why should you be careful of the words “Commo Solicitor/Client Costs” in some contracts?
The inclusion of these costs in the liability clauses of a contract of engagement should be strongly resisted. What it means is that Member would be funding the other parties’ costs in suing the Member.
