I’m about to tender a design using NEC4 PSC for works that will be handed to a third party that may (or may not) construct the works at an unspecified later date.
What insurance periods following completion (of the design) would be appropriate for each of the three standard Consultant liabilities, ie Skill and Care; Third Party Damage and Injury; Employee Injury
I also want to use Y(UK)3 Rights of Third Parties to transfer the Consultants design liability to the third party, so that my organisation is not considered to be the Designer by that third party. I plan to do this by giving the third party rights over the Correcting Defects clauses and the Consultants liabilities clauses.
Any views on whether this is a suitable/appropriate mechanism?
Under UK statute the Limitation Act1980 states you could be held liable for breach of contract or tort for 6 or 12 years depending if your contract is signed under hand or as a deed so I would align the periods in the PSC for skill and care / third party damage and injury with this. Employee injury I would be more relaxed about and accept a shorter period aligned with the period over which the service is to be provided up until the defects date (remembering to include a period for which there might be an extension of time).
Given how vague you seem to be about when the design might be used by a third party I’m not sure your approach would work. For example you give the third party the right to notify the Consultant to correct Defects, however this would only apply if the Defect was notified before the defects date. Outside of this it would have to be pursued as a latent defect. You may need to including bespoke novation clauses by way of Option Z to achieve want you want.
Alternatively, if the design was found to be defective you could recover your losses from the Consultant by claiming under their insurance which is why you’d asked them to provide insurance in the first place!
Thanks Neil.
You’ve confirmed by concerns regarding the third party rights and I think I will make a tactical retreat!! I take your point about recovering losses via Consultant insurance, but I was hoping to pass the burden of that on to the third party. Time to think it out again!!