Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
Check out our straightforward definitions of common legal terms.
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Access our unrivalled global news content, business information and analytics solutions
Insurance, risk and compliance intelligence using big data, proprietary linking and advanced analytics.
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
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.
MT Højgaard A/s v E.ON Climate And Renewables & Ors  EWHC 1088 (TCC)
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:
an obligation on MTH to use due care and diligence
The question was whether these were mutually incompatible.
The court decided that two sets of obligations—one to achieve a particular result (an absolute obligation) and another to exercise reasonable care or to do the work in a workmanlike manner—are not necessarily mutually incompatible. It is not uncommon for construction and engineering contracts to contain two sets of such obligations. On the facts of this case the two sets of obligations were not mutually inconsistent. Edwards-Stuart J gave the example of a building that is constructed to last a lifetime but out of mis-matched bricks. The absolute obligation to last a set number of years may be satisfied, but the obligation to carry out the work in a workmanlike manner would not allow for the blemish of mis-matched bricks.
The judgment does not create new law as it applies the general principles of contractual interpretation set out inRainy Sky SA v Kookmin Bank  UKSC 50,  1 All ER 1137. Nevertheless, there was a dearth of cases on this specific point, with the two other authorities referred to on this point being from the Supreme Court of Canada, the Court of Appeal for British Columbia, together with a passage from Hudson.
Although in this case the two obligations were held not to be mutually incompatible, the case is highly fact specific, and the wording of a contract in a different case may mean that an absolute obligation is incompatible with a skill and care obligation.
The case means legal professionals should exercise casre when agreeing terms to ensure that absolute and skill and care obligations are clearly identified.
Interviewed by Nicola Laver.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
This article was first published in LexisPSL Property on 8 May 2014. Click here for a free one week trial of Lexis®PSL Property.
Free trials are only available to individuals based in the UK
* denotes a required field
0330 161 1234