When obligations collide in construction contracts

When obligations collide in construction contracts

To what extent can obligations in a contract co-exist? Alison Fagan of Addleshaw Goddard examines a recent ruling where an absolute obligation was held not to be incompatible with an obligation to use skill and care.

Original news

MT Højgaard A/s v E.ON Climate And Renewables & Ors [2014] EWHC 1088 (TCC)

What issues were raised by this case?

The principal issue in this case was whether an absolute obligation in a contract can coexist with an obligation to use a required level of care and skill. Edwards-Stuart J decided that such duties can coexist.

The claimant (MTH) as contractor, entered into an agreement with the defendants (E.ON), as the employer, for the design, fabrication and installation of the foundations for 60 wind turbine generators for an offshore wind farm at a cost of just over €101m.

An international standard for the design of offshore wind turbines contained a value attributed to a variable used in one of the equations which was underestimated by a factor of about ten. MTH’s designer, like everyone else at the time, was unaware of the error when it carried out the design. Several years later, and after the wind turbine foundations were constructed, the error was discovered. The resulting remedial works cost €26.25m.

The contract contained two material clauses:

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