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![L E G A L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 21
industrywillbewillingtodothisandat presentit
appearssomewhatdoubtful.
It is however to be expected that third par-
ties, such as sub-contractors,will be interested
in using the Act as a defence to a claim against
themwhenthemaincontractpurportstoextend
to them the protection which it affords to the
main contractor. Atypical clause of this type is
clause36 of MFll which restricts the right of the
purchaser to claim damages attributable to
defectsand purportstoextendthat protectionto
sub-contractors.UndertheActtherecan nowbe
no doubt as to the effectiveness of that protec-
tion assuming always the validity of the clause
underthe UnfairContractTermsAct 1977.
Italsoseemsclearthat intheordinarycaseof
an employer, main contractor and domestic
sub-contracto'ror supplier, the employer would
not beabletoenforceagainstthesub-contractor
orsupplieranyof theobligationswhichthatfirm
owestothemaincontractorunless,whichseems
most unlikely, there was something expressly
writteninto the contract. The mere fact that the
employer would gain from the sub-contractor's
orsupplier's workwouldnotbesufficientto pur-
port to confer a benefit upon the employer. In
the same way a sub-contractor would have no
right against the employer to obtain payment
in the event of the main contractor going into
liquidation.
So far the discussion has been limited to the
position of those involved in the construction
operationsas it arisesin contract. At the time of
writing the third edition of this book it was
generally recognized, following the House of
Lords decision in Junior Books v Veitchi [1983]
A
C 520, that under certain circumstances an
employer could have a remedy in negligence
against a nominated sub-contractor. Although
that decision has not been formally over-ruled
effectively,it can no longer be regarded as good
law after the landmark decision of the House of
Lords in Murphy v Brentwood District Council
[1991]1A
C378.
In essence Murphy's case decided that as
regardsdefective goodsand buildingsthere was
a clear distinction between liability in contract
and liabilityin the tort of negligence.In contract
a builder is liable to the employer, or the sub-
contractorto the main contractor,for his defec-
tive work accordingto the terms of his contract.
He is, however, only liable to a third party, for
exampleasub-contractortotheemployer,inthe
tort of negligence for injury to persons or dam-
age to other property of the employer.He is not
liable to the employer for the defectsin his work
itself, no matter the seriousnessof such defects.
Defective work which causes the building to be
worthlessthan itwould beotherwiseisclassified
as economic loss which is only exceptionally
recoverableintort.
The liability in negligence for injury to per-
sons from defective work is reasonably clear. It
will extend to cover those persons whom the
builder should have had in contemplation as
being likely to suffer injury if he does not take
propercarein the performanceof hiswork.
Liability for damage to 'other property' is
more difficult.First, in this context what consti-
tutes 'other property'? It seems clear that it
would coveritemssuch as computerswhich the
employer has installed in the building under a
separate contract and which are damaged, say
by the fall of a defective ceilingconstructedby a
sub-contractor.However, consider the case of a
boiler installed by a sub-contractor which
explodes and damages other parts of the build-
ing. The cost of the replacementof the defective
boiler itself is a loss recoverable only in contract
and therefore only from the main contractor. If,
therefore,the main contractoris not availableto
be sued, the employer, or his insurance com-
pany, will be left without a remedy. But in those
circumstancescan the employer recoverat least
thedamagecaused bytheexplosionof the boiler
to the remainderof the buildingfrom the boiler
manufacturerin tort as being damage to 'other
property'? In Murphy's case it was suggested in
judgementsgiven by three of the LawLordsthat
he could do so providedhe could prove that the
explosion was indeed due to the negligence of
the boilermanufacturer.
The difficulty with this approach, what is
knownas 'the complexstructurestheory',is how
faritshould betaken.Forthe purposeof defining
'damage tootherproperty' thestructurewillnor-
mally be regarded as one unit. So defects in the
work of a structural steel sub-contractor which](https://image.slidesharecdn.com/925634-250618141756-0d070cea/75/Contracting-For-Engineering-And-Construction-Projects-5-Sub-Peter-D-V-Marsh-43-2048.jpg)
![L E G A L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 25
damages can be recovered for the loss of
expectations arising out of or created by the
contract. It is on this basis that an employer
can -in principle and provided they are not
too remote- recover damages for his loss of
profits arising from works which do not per-
form according to specification and not
merelyforthecostsof puttingthem right.
2 Thereare two alternative basesof assessment
which may be applied in contracts for engi-
neeringworks. The one has been referred to
as the 'difference in value' and the other 'the
costof cure'. Ingeneralitwouldappearthat in
the event of the contractorfailing to perform
the work correctly in accordance with the
specification the assessment will be on the
basis of 'the cost of cure' and this maystill be
so even if it resultsin theemployereventually
being placed in a better position than he
would have been had the original contract
been properly performed. So when a factory
wasburnt down becauseof the breach of con-
tract by the contractor the employer recov-
ered the full costs of rebuildingeven though
that gave him a new factory. However if the
loss sustained does not extend to the need to
reinstate then it would be unreasonable to
award the costs of reinstatement since the
award of damages is to compensate for the
loss. This was decided by the House of Lords
in RuxleyElectronicsvForsyth [I99611A
C344,
where a swimming pool had been con-
structed with a maximum depth less than
what the defendant must be presumed as a
reasonableman to have known at the time
of entering into the contract. In making
that assessment it is appropriate to take
into account the capacity in which the
defendant contracted. So an experienced
contractor erecting a block of flats for a
property developer must be presumed to
know that the employer intended to let
them at a profit. Accordingly,if he islate in
completion he would be liable to compen-
satethedeveloperforsuchlossof profitsas
werereasonablyforeseeable.
.anyactualknowledgewhich the defendant
possessed at the time of entering into the
contractand on the basisof which he must
be presumed to have contracted. This is
obviously reasonable in that such know-
ledgewould haveallowed himtheopportu-
nity of protecting himself against the risk
by, say, taking special measures to ensure
completion on time,or coveringhimself by
insurance against the consequences of
defectivedesign. So if the contractorin the
example above was specificallyadvised by
the developerat the time of tenderingthat
the building was for occupation by, for
example, foreign embassystaff who would
be payingexceptionallyhigh rents,then he
would be liable to pay damages based on
those rents were he to fail to have the flats
ready for occupation by the contractual
date.
specified. The cost of rebuilding was esti-
mated at £21 650.Therewas howeverno need 4 Contributory is a defenceto a
to reinstate.Itwasa perfectlyserviceablepool for damages founded On a breach of a
into which it was safe to dive, although its strict contractualobligation. So where a con-
depth was not according to specification. tractor had amongst other obligationsunder-
Held, that the award of damages should be
taken that Itheir materialsand workmanship
based on the loss of amenitywhich the wouldbethe bestof theirrespectivekinds' the
judgehaddecidedwas£2500. damages suffered by the employer could not
3 The damagesmust not be 'too remote'. Since be reduced because of alleged
the decision of the House of Lords in The the employer to disregard his own interests
H~~~~ 11 [1969] AC 350 (under the name (BarclaysBank plc v Fairclough Building Ltd,
Koufos v C. CzarnikowLtd),theloss must be a TheTimesl1Maylgg4).
'serious possibility',and it isonthat basisthat
incontractthewords'reasonablyforeseeable' DAMAGES IN NEGLIGENCE
must be interpreted.What is a 'serious possi- The general rules may be stated briefly as fol-
bility' willdepend upon: lows:](https://image.slidesharecdn.com/925634-250618141756-0d070cea/75/Contracting-For-Engineering-And-Construction-Projects-5-Sub-Peter-D-V-Marsh-47-2048.jpg)
![30 C O N T R A C T P L A N N I N G
should have been his purely profes- representationis any statement of fact made by
sional duty. In my judgement this was one party to the other before the contract is
the clearest possible instance of made and which inducesthe person to whom it
responsibilityfor the breach attaching is madeto enter into the contract. The represen-
totheemployers. tation must be as to a matter of fact and not just
(Reesand KirbyvSwanseaCityCouncil an assertionof opinion. However if the opinion
inthe HighCourt) is expressed by someone having or claiming
Although at one time it was thought that an
architect or engineer owed a duty of care to a
contractor who would be affected if the archi-
tectlengineer were negligently to under-certify
the value of his work, this now seems doubtful
following the decision of the Court of Appeal in
Pacijic Associates v Baxter [1990]QB 993. The
contract in that case contained an arbitration
clauseand a disclaimerof the defendant'sliabil-
ity. In essencethe decisionseemsto haveturned
on the structure of the contractualrelationships
between the parties and the fact that the con-
tractorcouldclaim againstthe employer in arbi-
tration.
Assuming the contract contains an arbitra-
tion clause, then it would seem that a claim by
the contractoragainstthearchitectlengineerfor
under-certification would only be likely to suc-
ceed if thearchitectlengineerwereto haveacted
deliberately in contravention of the contract
with the intent to deprive the contractor of
moneyto which he knewthat thecontractorwas
I
entitled.Thiswastheviewof the Court of Appeal
in Lubenham Fidelities v South Pembrokeshire
DC (see6 Con LR at page114).
PRE-CONTRACTUAL DISCUSSIONS
These may affect the relationships between the
partiesbecauseof:
1 Representations.
2 Collateralwarranties.
3 Theissueof Lettersof Intent.
REPRESENTATION
The problem of misrepresentation has already
been discussed in relation to one of the areas in
which it is most likelyto arise, namelythe giving
of data relating to site and soil conditions, and
the principlesset out there are of generalappli-
cation. However it is worth emphasizing that a
special knowledgeor skillin relation to the mat-
ter in question,or if by implication it is founded
on facts,then it willstill betreatedasa represen-
tation. In practice therefore, when inviting ten-
ders an employershould be extremelycareful as
to the data which he provides to the tenderers.
Unlessthe mattersare oneswhich it is impracti-
cal to expect the tenderers to find out for them-
selves, it is far better simply to make it clear
that it is their business to find out the infor-
mation they require in order to bid. It is also a
point which needs watching when conducting
bidders' conferences, or answering bidders'
questions.
Thegeneralpositionastoliabilityfor misrep-
resentation can be summarized briefly as fol-
lows:
If the representation is fraudulent (for the
meaning of this see p. 27),then the remedyis
damagesand recission.
If the representation is made negligently, i.e.
carelesslyand in breachof a dutyof care,then
the remedyisdamages.If the employer,or his
architectlengineer, professes to have special
knowledge or to have made particular en-
quiries, say about the soil conditions, and
fromthe wordingof the enquiryit isclearthat
the contractor was intended to rely on such
information and doesso rely,and it proves to
be inaccurate so that the contractor suffers
damage,then the contractormayhave a rem-
edy for negligent misrepresentation.This lia-
bility may be negated by wording in the
enquiryto the effectthat the contractoris not
to relyon anyinformation given for which no
liability is accepted but is to make his own
enquiries as to the site conditions. It is
thoughtunlikelyin commercialcontractsthat
sucha clausewould beregardedas unreason-
able under the Unfair Contract Terms Act
1977. It may,however,arise out of a commer-](https://image.slidesharecdn.com/925634-250618141756-0d070cea/75/Contracting-For-Engineering-And-Construction-Projects-5-Sub-Peter-D-V-Marsh-52-2048.jpg)
![Presentation on QSV 507 [Autosaved] Michael.pptx](https://cdn.slidesharecdn.com/ss_thumbnails/presentationonqsv507autosavedmichael-250411170329-ded6e429-thumbnail.jpg?width=640&height=640&fit=bounds)
Contracting For Engineering And Construction Projects 5 Sub Peter D V Marsh
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- 8. OPeterMarsh1969,1981,1988,1995,2000 All rights reserved.No part of this publication may be reproduced,stored in a retrieval system, or transmittedin anyformor byany means, electronic,mechanical,photocopying,recordingor other- wise,withoutthe permissionof the publisher. No responsibilityforanylosswhatsoeveroccasionedtoanypersonactingor refrainingfromactionas a resultof the materialcontainedin this publicationcan beacceptedbytheauthor or publisher. First published1969 Secondedition1981 Third edition1988 Fourthedition1995 Thiseditionpublishedby Gower PublishingLimited GowerHouse CroftRoad Aldershot HampshireGull3HR England GowerPublishingCompany 131MainStreet Burlington,VT05401-5600USA P.D.V. Marshhasassertedhisright undertheCopyright,Designsand PatentsAct1988to beidentified astheauthor of thiswork. British LibraryCataloguingin PublicationData Marsh,P. D.V. (PeterDavidVictor),1926- Contractingforengineeringand constructionprojects.- 5thed. 1. Constructioncontracts I.Title 624l.068 ISBN0566082829 Libraryof CongressCataloging-in-PublicationData MarshP. D.V . Contractingforengineeringand constructionprojects1P.D.V. Marsh.-5thed. p. cm. ISBN0-566-08282-9(hardback) 1. Engineeringcontracts.2. Constructioncontracts.I.Title. TypesetinGreat BritainbyIMLTypographers,Birkenheadand printedinGreat Britainby MPGBooksLtd,Bodmin.
- 9. Contents Listof illustrations xi Prefacexiii Tableof cases xu PARTONE CONTRACTPLANNING 1 1 Planningprocess 3 Procurementof worksorservices 3 Businesscase 3 Client's objective 4 Method and responsibility 6 2 Thecontractplan 7 Procurementroutes 7 Advantagesand disadvantagesof differentmethodsof contracting 11 Decisioncriteria 15 Summaryand conclusions-conventionalmethods 16 Privatefinanceinitiativeschemes (PFIs) 16 3 Legalissuesarisingfromthecontractplan 19 Personsagainstwhomtheemployerhasarightof action; and whoowetheemployera dutyof care 19 The measureof damages 24 Natureand extentof theemployer's liabilities 26 Pre-contractualdiscussions 30 Conclusions 31 PARTTWO TENDERINGAND PLACINGTHE CONTRACT 35 4 Competitivetendering 37 Opencompetitivetendering 37 Selectedlist 38
- 10. vi C ON T E N T S 5 Singletender negotiation 45 Methodsof pricenegotiation 45 Discussionof costsand prices 47 Head officecharges 48 Termsof payment 49 Equalityof information 49 Proprietaryequipment 50 6 Planningthe tender 51 Studyof theinquirydocuments 51 Planningthe tender 53 Tenderpricelevel 54 7 Jointventuresand consortia ,56 Approvalbythe purchaserto the jointventurebid 56 Jointventurecharacteristics 56 Specialconsiderationsapplyingtolocalpartners 58 8 Tender preparation 60 Tenderdocuments 61 9 Tenderappraisal 67 Organizationof tenderappraisal 67 Awardcriteria 68 Methodology 70 10 Placingthecontract 77 Contractwork 80 Purchaser's obligations 81 Contract price 82 ProgrammeITimefor completion 82 Performanceguarantees 83 Conditionsof contract 83 Appointmentof engineerorarchitect 83
- 11. I C ON T E N T S PARTTHREE TERMSANDCONDITIONSOF I CONTRACT 85 11 Standard termsof contract:I 87 Interrelationshipof conditionsof contract 87 Generalformsof contract 87 NewEngineeringContract (NEC) 94 I 1 12 Standard termsof contract: I1 97 13 Contractprice 113 Lumpsum 113 Scheduleof ratesor billof approximatequantities 115 Cost reimbursement 116 Managementoverheadsand profit 118 Priceto beagreed 119 14 Termsof payment 120 Policyconsiderations 120 Contractualsafeguards 124 Retentionmoney 126 Set-off 127 15 Timeforcompletion 128 Contractas meansof communication 128 Limit tovalueof undertaking 131 Criticalpathanalysis 133 Contractasmeansof providinganincentive 133 Methodortermsof payment 133 Bonusand penalty 134 Liquidateddamagesfor delay 135 16 Sub-contracting 139 Employer's rightto restrictsub-contracting 139 Safeguardsfor employers 140 Responsibilitiesof maincontractorforsub-contractors 140 Nominatedsub-contractors 144 Review 148
- 12. viii C ON T E N T S 17 Delivery 150 Responsibilityduringinstallation 150 Accesstosite 151 Responsibilityduringstorageand defectsliability period 152 18 Defects:guaranteesand remedies 156 Guaranteesfor materials,workmanshipand design 156 Remediesavailable 160 UnfairContractTermsAct 1977 163 Performanceguarantees 167 19 Insuranceand indemnity 170 Defectsinplantand equipmentsuppliedorwork executed 170 Injuryor damagearisingout of workexecutedon the purchaser'ssite 171 20 Functionsof architectlengineerlprojectmanager and the purchaser 178 Dutiesof architect/engineer 178 Positionof employer/purchaser 182 Projectmanagers 183 21 Variationsin priceand time 185 22 Claimsand their negotiation 193 Typesof claim 193 Claimspresentationand management 198 23 Disputeresolution 199 24 Particularformsof contract 206 Contractsforcomputersystems 206 Facilitiesmanagementcontracts 211
- 13. C O NT E N T S ix APPENDICES 217 Appendix1 Draftinstructionsto tenderersfora plant contract 219 Appendix2 Bid desirabilityquestionnaire 222 Appendix3 Questionnaireforsitevisits 223 Index 229
- 15. Listof Illustrations TABLES 9.1 Adjustedassessmentoftendersfor design,supply,installation, commissioningand testingof plantlequipment or process plant 70 9.2 Exampleof scoringof qualityand pricefortenderers 74 10.1 Form of agreement 80 14.1 Exampleof stage paymentschedule 123 15.1 Cost tableshowingbonuslpenalty 134 18.1 Costsand expensesinwhich purchasermaybeinvolved 161 21.1 Financialbalancebetweenitemoriginallyincludedand that orderedasavariation 186 FIGURES 2.1 Managementcontractingformsof responsibility 12 11.1 Networkanalysis 88 13.1 Howthefinalcontractpriceisarrivedat 116
- 17. Preface Sincethelasteditionwas published in1995 both the legislature and the courts have been busy making changes to the law affecting the con- struction industry. The main change has been the passingof the HousingGrants,Construction and RegenerationAct 1996, usuallyreferredtoas the Construction Act, and the StatutoryScheme which followed it. This Act and the Scheme implemented three of the reforms recom- mended by Sir Michael Latham in his report 'Constructing the Team': the introduction of a method of compulsoryadjudicationintoallcon- struction contracts other than those for the building of a residential property; the require- ment in all construction contracts other than those lasting less than 45 days for periodic pay- ments accordingto a defined timetable;and the outlawingof the notorious pay-when-paid pro- visionsother than wherethe third-partypayeris insolvent. Other legislation affecting contracting has been the new Arbitration Act 1996, the Late Payment of Commercial Debts (Interest) Act 1998 and the Contracts (Rightsof Third Parties) Act 1999. The most significant of these has been the introduction of a right for either party to a con- tract to refer a dispute to adjudication. After a slow start adjudication has taken off and it is reported that in the period April to August 1999 the number of adjudications taking place totalled 259. The courts haveshown strongsup- portforadjudicationand haveadopteda purpo- sive approach to the interpretation of the legislation especially in the area of the enforce- ment of adjudicator's awards where it is at its weakest.So far the legislation is clearlyworking and the industryis becoming more confident in the use of adjudication as the method of resolv- ingdisputes. Important rulings of the courts have included the Trafalgar House decisions in the House of Lords which not surprisingly over- turned the ruling in the Court of Appeal on the enforcementof a performancebondinthetradi- tionalform.Whilethishascaused thewordingof conditionalbondsto bemodernizedandsimpli- fied it alsomeans that such a bond is of little use to an employer when he most needs it, that is when the contractor becomes insolvent. Other decisions of the Court of Appeal have clarified the meaning of 'consequential damages' and confirmed the validity of the entire agreement clausein the MFI1conditionsof contract. Inthe publicsectorfield theGovernmenthas issued new guidance notes on the procurement of constructionworks and radically changed its mind on the preferred method of contracting, whichisnowdesignand constructor primecon- tracting.Arecent HighCourtdecision,Harmon v The Corporate Oficerof the House of Commons, has emphasized the need to follow strictly the rules of the Public Works Regulations and to treat all tenderers fairly when awarding con- tracts or face the consequencesof having to pay substantialdamages. In revisingthetexttocoverthesechangesthe opportunity has been taken to widen the cover- age to deal more extensively with contracts placedon the NewEngineeringContractand the Red Bookof the Institute of Chemical Engineers and also to look brieflyat contractsfor facilities management and for computer systems. As a consequencesome parts of the earlier text have been reduced and the chapter on fixed prices and priceescalationhas beendeleted. It is hoped that with these changesthe book will continue to provide a basic guide to the main commercial issues as they currently affect theconstructionindustry. xiii
- 19. TableofCases lOOF Australian TrusteesvSEAS Sapfor Forests (1995),202 Alfred McAlpine Construction Ltd v Unex CorporationLtd (1994),107 AmecBuildingLtd vCadmusInvestmentCo. Ltd (1996),198 Aughton vMFKent (199157B L R l),203 B & S Contracts & Design v Victor Green Publi- cations(1984),138 Bacal Construction (Midlands) Ltd v North- ampton Development Corporation (1975 8 B L R 88),27 Balfour Beatty Civil Engineering v Docklands LightRailway (1996)) 183 BarclaysBank plc vFairclough BuildingLtd (The Times11May 1994),25 Beaufort Developments (NI) Ltd v Gilbert Ash (NI)Ltd (1998AUE R 778),204,205 Belcher FoodsLtd vMiller and Blackand Others (1998),159 Bellefield Computer Services Ltd and Unigate v Turner and Sons Ltd (2 July 1999) (BLISS ConstructionLawDigest2000,page 127),22 Black Country Development Corporation vKier ConstructionLtd (1996),203,204 BouygesU K Ltd vDahlJensenU KLtd (1999),202 BritishSteelCorporationvClevelandBridgeand EngineeringCo. Ltd (19841A l lE R 504),3 1 British Sugar plc v NEI Power Plant ProjectsLtd (199887B L R 42),29 Bryant & Son Ltd v Birmingham Hospital SaturdayFund (1938AllER50321),28 Burden v Swansea Corporation (19573 All E R 243),180 Butler Machine Tool Co. Ltd v Ex-Cell-0- Corporation (England) Ltd (1979 1 All E R 965),79 Caparo Industries plc v Dickrnan and Others (19902AC605),22 Carr v J.A. Berrirnan Property Ltd (1953 ALJR 273),196 Centro-Provincial Estate v Merchants Investors AssuranceCo. (1983CA),80 Chester Grosvenor Hotel Co. Ltd v Alfred McAlpine Management Ltd (1991 56 B L R 115),166 Clonard Developments Ltd v Humberts (19991, 205 CMTCToolks vYuesaWarwickMachinery,197 ConcordevColgan (1984HongKong),127 Conway v Crowe Kelsey and Partners (1994 39 CONLR l),33 Courtney & Fairbairn Ltd v Talaini Brothers (Hotels)Ltd (19752B L R 97),119 CroudaceConstructionLtd vCawoodsConcrete ProductsLtd (19788B L R 20),29 CrownEstatesCommissionersvJohnMowlem& Co.Ltd (19941,159 CynatProductsLtd vLandbuild(Investmentand Property)Ltd (19843AER 513),172 D & F Estates Ltd v Church Commissioners for England (1989AC177),22,24,31,173 DavisContractorsLtd vFarehamUDC (1956A C 696),62 Deepak Fertilisers and Petrochemicals v Davy McKee (London) Ltd and Another (1998 2 LloydsRep 139),99 Dunlop Pneumatic Tyre Co. Ltd v New Garage MotorCo. Ltd (1915AC79),135 Edgeworth Construction vND Lea & Associates and Others (199366 BLR),27 Edmund Murray Ltd v BSP International FoundationsLtd (1992),162,164 Ens vDerwent(19981,107 EssoPetroleumCo. vMardon(1976Q B801),31 F.G. Minter Ltd v Welsh Health Authority Technical Services Organisation (1980 13 BLR,198113BLR I),28,198 Fairclough Building Ltd v Rhuddland Borough Council(5Oct 1983),144,147 Ferguson vWelsh and Others (19873 A E R 7771, 172 GLC vClevelandBridgeand EngineeringCo. Ltd (19868CONLR 30),103 GMTC Tools v Yuasa Warwick Machinery (The Times3Jan19951,197
- 20. xvi T AB L E O F C A S E S General Buildingand Maintenance vGreenwich Borough Council (The Times 3 March 1993), 38,39 George Hawkins v Chrysler and Bume (198638 BLR 36),24 GlenlionConstruction Ltd vThe Guinness Trust (198711CONLR 127),103 GloucesterCC ~Richardson (19691AC480),20 GreaterLondonCouncil vRyarshBrickCo. (1985 4CON L R 85),20 Greater Nottingham Co-operative Society v Cementation Piling and Foundations Ltd (1989QB71),23 Greaves vBaynharnMeikle(19753 AllE R 99),24 GrinakarvTransvaalAuthority(1982SACA),195 Hadley vBaxendale(18549 Exch341),29,194 HalkiShippingCorpn vSopexOilsLtd (19982All E R 23),204 Harmon CFEM Facades (UK) Ltd v The Corporate Officer of the House of Commons (28Oct 1999),xiii,39,67 HedleyByrne &Co. vHellerand Partners (19632 AllER),22,27,33,113,175 Henderson vMerrettSyndicatesLtd (19943WLR 761),22,29,163 Henry Boot Construction v Alsthom Combined CyclesLtd (199964CONL R 32),188 Hickman vRoberts (1913AC229),181 Hoenig vIsaacs(1952CA2All E R 176),113 Howard Marine & Dredging Co. v A Ogden & Sons (Excavations)Ltd (19779 BLR34),27 IBA vBICC (198014BLR l),31 IBA v EM1ElectronicsLtd & BICC (197811 BLR 29),24 ICI vBovisConstruction Ltd and Others (199232 CON LR90),196 Interfoto Picture Library v Stiletto Visual Programmes Ltd (The Times 14 Nov 1987),42 J.Crosby &SonsLtd vPortland UDC (19675 BLR 121),196 JMJContractors Ltd vMarplesRidgway (198531 BLR loo),110,111 Jacobs vMorton and Partners (199472 BLR 92), 22 John Jarvis v Rockdale Housing Association (198610CON L R 51),194 Jones vsherwood Computer Servicesplc (19921 WLR 277),202 Junior Books vVeitchi(1983AC520),21,22 Koufos vC. Czarnikow (TheHeron 11) (1969AC 350),25 Linden Gardens Trust Ltd v Lenesta Sludge DisposalsLtd (19941AC85),90 Lubenham Fidelities vSouth Pembrokeshire DC (19866CONL R 85),30,180 Macob Civil Engineering v Morrison Con- structionLtd (199964CONL R I),202 MathewHall OrtechLtd vTarmacRoadstoneLtd (199887BLR96),159 MiIlar's Machinery Co. Ltd v David Way & Son (1934),29 Mitsui Construction Co. Ltd vA G of Hong Kong (198610CONL R 1).115,195 Muirhead v Industrial Tank Specialities (1986 3 AllE R 705),80 Murphy vBrentwoodDistrictCouncil (19911AC 378),21,22,24,31 NationalCoalBoard vWilliam Neil &Son (19841 AllER 555),99 North West Metropolitan Hospital Board v TA. Bickerton & Son Ltd (19701 WLR 607), 147 Norwich Union Life Insurance Society v P&O Properties Holding Ltd and Others (1993EG 108),202 Outwing Construction Ltd v Randell & Son Ltd (1999TCC loo),202 Oval (717) Ltd vAegon Insurance Co. (UK) Ltd (199654CONL R 74),106 Pacific Associates v Baxter (1990 1 QB 993). 30, 178 Paddington Churches Housing Association v Technical and General Guarantee Company Co. Ltd (1999BLR244),104 Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (19701 BLR11I),28 Pearson Ltd vDublin Corporation (1907AC 351), 27,99 PercyBilton vGLC(198220BLR I),138 PeriniCorporation vCommonwealthofAustralia (196912BLR 82),180 Phillips Hong Kong Ltd v Attorney General of HongKong (199361BLR 41),136 Rees and Kirby v Swansea City Council (1985 CILL188 56,5CONL R 34),29,30,198 Ruxley Electronics vForsyth (19961 AC 344),25, 160
- 21. T A BL E O F C A S E S xvii Saphena Computing Ltd v Allied Collection Agencies (3May 1989),215 Scott Lithgow vSecretaryof Defence (1989),143, 144 ShanklinPier Ltd vDetelProductsLtd (19512All E R 471),20,22 Simaan General Contracting Co. v Pilkington GlassLtd (19881QB758),23 Sir LindsayParkinson &Co. Ltd vCommissioner of Works (1950AUER208),196 Southern Water Authority v Lewis & Duvivier and Others(19841CONL R 40),164 St AlbansCity and District Council vICL (1996), 169,210,215 Steel Company of Canada Ltd v Willand ManagementLtd (1966Canadiancase),81 Strachan and Henshaw v Stein Industrie (UK) Ltd and GEC Alsthom Ltd (December 1997 CAI,80,98,99,185 SutcliffevThakrahand Others (1974AC727),178 Tate & Lyle Food & DistributionLtd vGLC (1982 1WLR 149),28,197 The Heron I1 (1969 A C 350 - Koufos v C. CzarnikowLtd),25 The Queen in Right of Canada v Walter Cabott ConstructionCo. (197521B L R 42),107 TheSalvageAssociation vCAPFinancialServices Ltd (1995FSR 654),166,209 ThemehelpLtd vWestand Others (19954All E R 215),107 Thomas Bates vThurrock Borough Council (CA 22 Oct 1975),26 Trafalgar House Construction (Regions) Ltd v GeneralSuretyand GuaranteeCo. (1995),xiii, 104 Turiff Construction Ltd and Turiff Ltd vRegalia KnittingMillsLtd (19719BLR20),31 United TradingCorporationand Others vAllied Arab Bank Ltd and Others (FT Commercial LawReports17July1984),106 Victoria LaundriesvNewman (1949),29 Viking Grain Storage Ltd v T.H. White Installations(19853CONLR 52),24 Walford and Others v Miles and Another (The Times27Jan 1992),119 West Faulkner Associates v Newharn London Borough Council (The Times 18 Nov 1994), 103 Wharf Properties Ltd and Another v Eric CumminsandAssociates (1991),196,197 WimpeyConstructionU K Ltd vPoole(TheTimes 3May 1984),24 Wraight Ltd vP.H. & T. (Holdings) Ltd (196813 B L R 26),28 Young & Marten Ltd v McManus Childs Ltd (19699 BLR 77),146
- 23.
- 25. CHAPTER ONE Planning process PROCUREMENTOF WORKS OR SERVICES With any project the client's first step should be the development of a procurement strategy which will best satisfy that client's business objective. This strategy need not necessarily involve the client in undertaking construction. On examiningthe alternativesopen to theclient it may be found that selecting a construction project is not the optimum way of meeting the aimsof the businessand obtainingbestvaluefor money. Ratherthan constructinga newfacilityit may be more cost effective to contract out the serviceswhich the facilitywas intended to pro- vide. In some circumstances the provision of those services by the service provider may necessitatethe constructionof particular works. But the contract which is then entered into by the client is essentiallyone for the supply of the servicesand not for the designand construction of thoseworks;that then becomes the responsi- bility of the service provider. This is an import- ant issue when entering into public private partnerships, particularly private finance initiative schemes (PFIs),which are considered furtherin Chapter2 (seep.17). Before therefore the firm or authoritydecide to procure construction works on their own account they should satisfy themselves that doing so is the most efficient and cost effective means of fulfilling the business aims over the projected life of the facility concerned. In order to do this the client needs to appoint a senior personwithinits own organization to take over- all chargeof the project-sometimesreferred to as'the projectsponsor'.The projectsponsorwill require professional advice regarding the options open to the client and their associated costs, benefits and risk. Preferably this advice should be obtained in-house from the client's functional departments. Only if there are no appropriateskillsavailable in the client's organ- izationshould an outsideconsultantbeengaged and then his engagement should be strictly limited to the planning stage with no ongoing commitment.Every precautionshould be taken to ensure that the persons providing advice to the project sponsor, whether from in-house or an outside consultant, do not have a vested interest in which option is selected. A person hopingto obtain designworkif the construction option is chosen may not be the best person to actasan unbiasedadviser. BUSINESS CASE If afterappraisalof thealternativestheconstruc- tion procurement route is selected as the pre- ferred option then the client can proceed with the next stage of planning the project. This is whereany mistakesmadewill bedifficultto cor- rect later and where time and money can most easilybelost orsaved. Plan beforeyou construct -thefirstlawof contracting. The planning should be undertaken by a team under the leadership of the project spon- sor. The team will includerepresentatives of the user, technical, commercial and financial func- tions with any professional adviser who has already been appointed. The initial task of the teamisthepreparationof a businesscaseincon- firmation of the decision to proceed with con- struction procurement and to provide the basis for the development of the project's strategic plan. The following information should be included in the business case, much of which should already be available from the work done by the team in making the comparison between thealternativeprocurementstrategies: the outline capital and operating budgetsfor the projectoveritsexpectedlifetime the quantified benefitsto the clientwhich the projectisexpectedtodeliver howthe projectisto befinanced
- 26. 4 C ON T R A C T P L A N N I N G a risk assessment in terms of cost, time and performancegivingtheextentof the risks and the probabilityof theiroccurring-thisshould also show how the risk is to be managed and the extent to which these risks are to be sup- ported by contractors and consultants or covered by insuranceand those which will be lefttobe bornebytheclient theoutlineprogrammeforthe project the procurementsystemto beused the resourceswhich the client will requirefor the managementof the projectand howthese are to be provided either in-house or by the engagementof consultants. Many of these issues are inter-related. The apportionment of riskas between the client and others will depend upon the procurement sys- tem to be used as will the management resources. The budget and the programme are inter-relatedwiththe benefitswhich theclientis expecting the project to produce. The issues need therefore to be considered as a whole to ensure theirconsistencyand trade-offswillhave to be made as necessary between one issue and another. CLIENT'S OBJECTIVE Any purchase is almost of necessity a compro- mise. There are few occasions when any employer can afford to have the best of every- thing,even if thiswereobtainable.Shorterdeliv- ery may only be achieved at the expense of higher prices. What one can afford may deter- mine the quality of what one can buy. Shortage of capital may cause the purchaseof equipment withhighmaintenancecosts.Shortageoflabour, or the need to reduce dependence on labour, maynecessitatethe purchaseof equipmentwith a substantialdegree of built-inautomation.The absolute need from the safety angle to ensure complete reliability and conformity with rigor- ous specifications may limit the choice of sup- pliers to those possessingthe highest standards of qualitycontrol. The process of defining the objective starts therefore with the selection of those factors which are regarded as being of the maximum importance to the transaction in question. Sometimes from even a cursory examination onefactorwillstandoutasof vitalsignificance.It may be time of delivery. Once this has been established, then all subsequent actions will need to be subordinated to its achievement:the selection of the supplier,the formulation of the specification, the placing and wording of the contract, the action on progressing; all must be compatiblewiththedefinedobjective. More often no single factor stands out so clearly that others can be ignored. Certainly delivery on time may be important, but so too may be quality and price. Some sacrifice may be necessary in the interest of speed, but there are limits beyond which the pursuit of speed may become largely a self-defeatingexer- cise. Thelist belowsetsoutthemainfactorswhich are commonly comprised within the client's objective: Time How soon must the project be com- pleted? How valuable to the client is each week bywhichcompletion isearlierand what financialdetriment would the client sufferfor eachweekof delay? Cost Howseriouswould a cost over-runbe? How important is it to the client to know the finalcostat thetimeof placingthe contract(s1 forthe project? Performance What guaranteed level of per- formance must the projectachieve?What are the consequences to the client if this level is not achieved? Quality What level of quality is required? Whatisthe requiredlifeof the project? Technical complexityIState of the art How complexisthe projectrequired to beand how near to the state of the art? Has a project already been successfully completed to the sameorsimilarspecification? nexibility Does the client expect to have to make significant changes to the project dur- ingconstructioninorderto meet the business objectives?Should the project be capable of expansion to meet a future increase in demand? Risk What are the main risks to which the
- 27. P L AN N I N G P R O C E S S 5 projectisexposed?Towhatextentistheclient personallywillingandableto beartheserisks? Involvement To what extent does the client wish and have the capabilityto beinvolvedin thedesignand managementof the project? Thesefactorsare alsosignificantlyinter-related. If the projectisrequiredto beof a highquality,to meet stringent guaranteesand is complex then there are technical risks which may impact on the achievement of the completion date. To the extent that the client foresees the need to make modifications then both the completion date and the final cost will be affected. A client who wishes to be involved closelyin the designof the project must accept the responsibility which goes with that involvementand the riskagain to both the programme and cost. On the other handif theclientiswillingtostand backfrom the designand managementthen thoserisksmay be passedwhollyon to thecontractor.Howeverthis will be reflected in the contract price and the client will need to ensure that the contractor is capableof absorbingthe risks. Time, cost and capacity, using that term to refer not just to the size but also to the design and technical qualities of the project, have largely a fixed relationship. If one has a certain value then so do the other two; alter one and you alter at least one of the others. This may bedescribed as the secondlawof contracting. If, for example, it is once established that the logic of asituationisthatthecapacityrequiredcannot be met within the price limit set by manage- ment, or only if the time is extended, then man- agement must be informed at the earliest possible moment so that they have the oppor- tunity to reconsider and, as necessary, redefine the objective. It is no use hoping that somehow the pricewillcomeoutall rightonthedayorthat savings in time can be achieved by shutting one's eyes to reality. It just does not work that way. The projectsponsoris responsiblefor distill- ing the answers to these questions into a set of objectives which will be used to decide on the procurementsystemtobeusedandwillformthe basisof the criteriauponwhich tenderswilllater beassessed. EXAMPLE An example of a set of objectivesfor the design and constructionof a processingplant is set out below Thecapitalbudgetforthe projectisE5 million whichincludesa 10percent contingency.The annual operating budget covering staff, labour,consumablesandsparesisEl million. The project is required to be in commercial operationwithin24months of the decisionto goahead. The profitabilityof the project is sensitive to an increase in the capital costs over 10 per cent or the operating costs over 15 per cent. Any delayin completionwould cost the com- panyaround£40000a weekinlostincome. The company is only interested in a proven processwhichisalreadyin useelsewhere.Any contractorwouldhavetodemonstratea refer- ence plant for which he was responsible for the design and construction and which had been in successfuloperation for a minimum of 12months. The plantis to beof highqualitywithan oper- ating life of 25 years. The plant will operate continuously other than for a two-week annual shut-down. Key items of the plant (to be identified) must be guaranteed for ten yearsagainst any defect which would cause a plantstoppage. The plant must be capable of processing 50 tons per hour of raw material.The processed material should have a purity level of at least 97 per cent with a yield of 90 per cent. At any puritylevel below95 percent or a yield of less than 80 per cent the plantwould not be com- merciallyviable. Theclientwillpersonallyfinancethe project. The chosen site is within an industrial com- plexowned by the company. The main risk is the non-achievementof the purity and yield levels which is to be solely the contractor's. Theclientwillaccept no responsibilityforthe designof the plant. The plant is to be designed so that an additional production line capable of handling25 tons of material an hour could be installedwith the minimum of interruptionto
- 28. 6 C ON T R A C T P L A N N I N G production. Provision is to be made for this is neversufficienttosaythatcertaingoodsare to addition in the sizing of the power and other be supplied, plant manufactured or works con- suppliesto the plant and any common facili- structed by a defined date without at the same ties- time thinking of what might be called 'the three , Ws'. This then is the third law of contracting: METHOD AND RESPONSIBILITY 'that for each contractlproject there must be stated:what-bywhom-and bywhen'. From the definition of the objective in time The most commonly used systems of and a study of the resources both available procurement, the allocation of responsibilities and required the team can proceed to the plan- within each, their respective advantages and ningof the method to be used and the responsi- disadvantages and the key decision criteria are bilitiesto beallocatedtoachievetheobjective.It examinedinthenextchapter.
- 29. CHAPTER TWO Thecontract plan Followingthedecisiontoprocurea construction project a contract plan needs to be prepared for the total project, not just for the letting of the principal contracts, but for every activity which has to be carried out to bring the project to its conclusion,includingthosewhichare to be per- formed by the employerhimself. Nor in its total- ity is it concerned solely with engineering and construction. It should cover the provision of funding and all those associated activitiessuch as purchase of land, obtaining of wayleaves, planning permissions and the like and even recruitmentof staffllabourand agreementswith the unions for workingat newlocations or with different operating procedures. With a new process plant or other productionfacilityit may need to cover the conclusion of offtake agree- ments with future purchasers of the product since these may be a vital part of the financing arrangements for the construction works. Indeed with a project which is to be financed primarily on the security of the profits to be expected from its operation,such as a new gas- field, the Channel Tunnel or new motonvay construction,the lenderswill be concernedwith ensuring that every item which can possibly affect the level of profitability has been taken into account in the planning process.The same approach should be adopted by any employer concerned with a new project, large or small, since too many projects have failed to produce their intended benefits because of a failure to anticipate,planforand implementthoseassoci- ated activities. Having drawn attention to that issue it is intended within the scope of this work to con- centrate on just those actions which are related directlytoengineeringand constructionworks. The contract plan selects the procurement route to be used for the executionof the project. Since the publication of the Construction Task Force Report Rethinking Construction in July 1998and theadoptionofmanyof itsrecommen- dations by the Government, the emphasis in planninghas been placedfirmlyontwoareas: the integrationof the key players in the con- struction supply chain, particularly the designersand main contractors,and the selectionof a procurementmethodwhich will provide overall value for money over the wholelifeof thefacilitybeingconstructed. PROCUREMENTROUTES Four main procurement routes can be followed in addition to PFIs, which were referred to in Chapter 1 and which are considered in more detailat theend of thischapter.Theseare: fullturnkey partialturnkey traditionalclientco-ordinated managementcontracting. These are not terins of art and within each method there are, in practice, variations. The methods will now be briefly described and the advantages and disadvantages of each dis- cussed. Some decision criteria will then guide theclientastowhichtoadopt. FULLTURNKEY The term 'turnkey' is used in its originalsense to mean a contract where the contractor under- takes the total responsibility for the design, engineering, procurement, construction, com- missioningand testingof the works and training of the client's staff. That is, everything which necessaryfor theclientwho onlyhas to 'turn tk key' in order to commence production or othc use of the facility. The client's resp are limited to the definition of the ments, making the site available, I progress of the work, payment and'taking over the project when it has passed its guarantee tests.Allother obligationsrelatingdirectlyto the onsibilitit !ir requirc monitorir
- 30. 8 C ON T R A C T P L A N N I N G designandexecutionof theprojectare underthe accordancewith theContractandfitforthe pur- sole responsibilityof the turnkeycontractor and pose for which they are intended as defined in withoutinterferenceorapprovalbytheclient. the Contract'. The NEC form is intended to It follows that the terms of contract must be impose the liability upon the contractor to substantially more onerous on the contractor design strictly in compliance with the works than those normally found in most standard information, unless Option M, which provides formsof contract.Forexample: that thecontractor'sliabilityislimited to the use the design obligation of the contractor is strict, that is that the project isfit for the pur- poseasdefinedin theclient's requirements a restricted list of named events entitling the contractortoan extensionof time takeover of the project bythe clientonlyafter theguaranteetests have been passed or liqui- dateddamagespaidforlowperformance extended defects liability period - minimum five years -with liquidated damages for any period the project is out of operation due to defects on-demand performance bond and, if appro- priate, parent company guarantee on an on- demand basis. Thereare certainindustryformsunderwhich the contractor has a design responsibilitybut which, unless heavily modified, are not 'turnkey' con- tracts. ICE and JCT forms for design and con- structor design and build contracts do not place thewholedesignresponsibilityonthecontractor. The design is often undertaken bythe contractor on the basis of a design concept prepared by designersengaged by the client. Furthermorethe contractor's designobligationisfrequentlystated in such contracts to be only one of exercising reasonableskill and care and not that the works as constructed will be fit for the purpose laid down in the client's statement of requirements uponwhichthecontractor'stenderwasbased. Similarlyfor plant contracts the contractor's design obligation in form MFI1 is not a strict obligationof fitnessfor purpose.Moreovernone of thesestandard formsincludesthe more oner- ousobligationsreferredto aboveas beingneces- sarywithatrue turnkeycontract. The only standard form to state the more onerous design obligation clearly is the FIDIC Conditions of Contract for Design and Build - Turnkey, which provides that 'The Works as complete by the Contractor shall be wholly in of reasonable skill and care, is included in the contract. However, even the FIDIC form has its limitations. For example, the defects liability period is 12 months and there is provision for testsaftercompletion. The pointsare not academic.If the projectis beingfinanced on a projectfinancebasisthen it is very probable that the lenders to the project will require the contractor to accept a turnkey form which imposes strict liability on design, despite the difficultywhich the contractor may have in obtainingprofessionalindemnityinsur- anceonthisbasis (seefurtherChapter19,p.175) and also the other onerous obligations referred toearlier. There can be added to the contract obliga- tions on the contractor to maintain and even operate the facility after its construction. It has been suggested by the Government - Pro- curementStrategyno.5-thataddingthisoption will provide the contractor with an increased opportunity for adopting innovative solutions that provide better valuefor money. Certainlyif the contractor is to be responsible for future maintenanceon a firm price basisthen it will be in the contractor's interest to ensure that the facilityis designed with the objective of reduced maintenance costs and ease of carrying out maintenancework. Prime contracting referred to in Pro- curement Strategy no. 5 is another form of turnkey, yet to be proven in practice, in which the prime contractor is responsible for bringing together all the parties in the supply chain and providing the client with a single point of responsibilityover the life of the project. It will includethereforefacilitiesmanagement. PARTIALTURNKEY With anyform of partial turnkeycontractingthe division of work and responsibilitiesas between the employer, the consultants and the turnkey
- 31. T H EC O N T R A C T P L A N 9 contractor is necessarilyless clearcut and sub- ject tovariationsto suit the wishesof the parties. To the extent that the employernow undertakes certain work either directly or through consul- tants or other contractors independentlyof the turnkey contractor, the employer's level of responsibility will increase, both for the work itself and the co-ordination of that work with that for which the turnkey contractor remains responsible. Perhapsthe most common form of arrangement is that in which the turnkey con- tractor undertakesresponsibilityforworkwithin what is often referred to as 'battery limits', i.e. the main process or production plant itself, whilst the employer contracts separatelyfor the supporting facilities. The employer may also wishtohaveacloseinvolvementinthedesignof, and supply of equipment for, the production plant. But in so doinghe must balancewhatever advantage he believes he gains, against the resultantdiminutionin the turnkeycontractor's contractual responsibilities. What he cannot do - although many make the attempt - is to dictate to the turnkeycontractor how he should perform the work, whilst seeking to hold him wholly responsible for the results. In my view the only sensible division of activities, and therefore of responsibilities, as between the employer and the turnkey contractor is that the employer's involvement is limited to those activities which do not impact directly on the production plant, for example, a separate contractforthelandscaping,the perimeterfenc- ing and lighting, the office block and the gate- house. TRADITIONALCLIENTCO-ORDINATED With this method design is the responsibilityof the client, usually through the engagement of a consulting engineer or architect, and the main contractor'sresponsibilityislimitedtoconstruc- tioninaccordancewiththedesignandspecifica- tions produced by the engineerlarchitect. Furtherthe projectmay be divided intoseparate packages with one contractor being responsible for each and the client, again through the engineerlarchitect, being responsible for the co-ordinationof theseparatecontracts. Traditionally this method has been used by the Government and the major public utilities. Nowthe Governmenthas changed its mind and its Procurement Strategy Document no. 5 has comeoutstronglyinfavourof publicprivatepartnerships design and construction with, where appro- priate,maintainand operate primecontracting(referredtoabove) frameworkagreements. The document goes on to state that traditional forms of construction procurement, where the detailed design is largely completed before the main contractor,sub-contractors and specialist suppliersbecome involved,limit the opportuni- ties for eliminating wasteful activities and achievingvaluefor money. Theyshould only be used where there is a very clear case that they will deliver better value for money than other procurement routes in terms of whole life costs and overallperformance. Since they became privatized and discarded their in-house technical capabilities, the major utilities, especially in the power industry, also now favour turnkey contracting. A recent esti- mate in the European Construction Institute's ECI News is that over 50 per cent of the world marketfor powerplantsis turnkeyand the trend isupward. It is too early to assess the full impact of the Government'schangeof approachto publicpro- curementand toknowwhetheror not thiswillbe followed bylocalauthorities. What is clear is the Government's intention to focus on the total process of design, construction, operation and maintenance over the life of the facilityand that specificationsshould be outcomebased and not prescriptiveof the detailsof howthe outcomeis to beachieved. MANAGEMENTCONTRACTING The management of a project, both as a whole and its component activities,such as designand construction, has long been recognized in the USas a separatediscipline,and thisconcepthas nowbecomewidelyacceptedwithinthe UK.The issueis then howthe projectshould be managed for the benefit of the employer and three differ- ingapproachescan bedistinguished:
- 32. C O NT R A C T P L A N N I N G 1 Project management. The employerappoints a professional project manager to act on his behalfin the managementof the project. 2 Construction management. Under this form the construction manager enters into a direct contract with the employer for the manage- ment of the construction of the project and may undertake a responsibilityin relation to time and cost. All other consultantsand con- tractors also enter into direct contracts with theemployer. 3 Management contracting. Generally under thisform the employerappointsonecontrac- tor who cames out none of the work himself butsub-contractsallof ittoworkscontractors responsible directlyto himself but under the control of the employer, through his project manager. The design and other consultants are appointed by, and responsible to, the employer. The appointment of professional project man- agershas become much morewidespreadin UK practice and is specifically provided for in the New EngineeringContract (seep. 94).The main problem with such appointments lies in the degree of responsibilitywhich the project man- ager owes to the employer and possibly also to the contractors. This issue is discussed further later (seenext column).Their contract does not affect the contractual relationship between the employerandothersandsowillnot bediscussed further. Construction management in its usual form does,however,affecttheemployer'scontractual relationships with others. The employer is placed in direct contractwith the varioustrades contractors who may well include some whom under the traditional client co-ordinated method would have been nominated sub-con- tractors to the main contractor. The employer also being in direct contract with the other pro- fessionals, such as the architect and structural engineer,mayfindhimself facedwithsignificant tasks of co-ordinationand administrationwhich maynecessitatetheappointment additionallyof a project manager unless his contract with the constructionmanagerisextendedto encompass those tasks. This is quite contraryto the original conceptof constructionmanagement. Itwasthe construction manager who was supposed to manage both design and construction and be responsibleforthedesignprogramme,monitor- ingthedesignprogressandforthe buildabilityof the design. In the US, where the concept origi- nated, the constructionmanager is the leaderof the team both for the managementof thedesign and for construction. This is not the usual position in the UK where the leader appears to betheemployer. Twootherissuesarise. First,thatof theliabil- ity of the construction manager for the work of the various trades contractors. It can be argued that theconstructionmanagershould havea lia- bilityfor them,sinceotherwisethe employer,by having a multitudeof separate contractorseach working to him and each likely to blame the others if anything goes wrong, would be left in practicewithoutan effectiveremedy. (Elizabeth Jones in the International Construction Law Review1993, at p. 353, arguesthis way.) Against this it is suggestedthat making the construction manager responsible for the trades contractors removeshimfrombeinga partof theemployer's team and recreatestheclimateof adversarialism a reduction in which it was intended that this methodof contractingshouldachieve. Thesecond issue is that of the liabilityof the construction manager himself. He will clearly be responsible to the employer for exercising reasonableskill and care in the performance of his dutiesand may,dependingon the definition of hisscope of responsibility,be under a greater duty(seep. 184). Further it is considered that the contractual duty of the construction manager to the employer to supenrisethe work of construction or installation would include the responsibility of being familiar with any particular methodsof work to be employed and knowledge of any manufacturer's instructions to be applied. In this respect and depending on the terms of the particular contract it seems that the construc- tion manager's responsibilities for supe~sion could be greater than those of an architect or consultingengineer. Thethird method,managementcontracting, haslostsomethingof itsone-timeappeal. Under
- 33. T H EC O N T R A C T P L A N 11 this method it is normal for the management little part and most contracts are developed by contractor to be responsible to the employerfor individual clients or contractors. In practice the workof the works contractorswith whom he therefore the responsibilitiesmayvaryfrom one is now in direct contractual relationship, but contracttoanother. ultimatelyhisliabilityfora breach of contract by a works contractor is generally limited to thk amounts which he is able to recover from that ADVANTAGESAND DISADVANTAGES works contractorin arbitrationllitigation.In the OF DIFFERENTMETHODSOF absence of such a limitation his liability would CONTRACTING hardly be differentfrom that of a normal main contractor. That his liability should extend to beingfully responsiblefor failuresin time, price or standards of work of his sub-contractorsis a view which has often been expressed by tradi- tionallyminded quantitysurveyors. Such a view retains the time-honoured adversarial relation- shipand withitthe roleof theprofessionalquan- titysurveyoractingfor hisclientin oppositionto the contractor,and negates the very purpose of the managementcontractingsystem. The difficultywith managementcontracting is that it does not place the management con- tractor firmly on either the employer's or the contractor's side of the table and bitter experi- encehastaughttheauthor thatyoucannotsit on both. The greater the degree of responsibility which the employer seeks to place on the man- agement contractor in terms of completion to time and to a predetermined cost, the more closelyhis role resemblesthat of a conventional main contractor and the more strongly is re- created the adversarial contractual relationship between employer and contractor which it was one of the objectives of the management contracting system to remove. Again the management contractor under a standard form such as that produced by the JCT, although required to co-operate with the employer's pro- fessionalteam responsible for the design,is not himself responsible for the management of the design process. This is clearly a great weakness in that it dilutes his responsibility for the pro- gramme. The respectiveresponsibilitiesof the project manager, construction manager and manage- ment contractoras theyare commonlyfound in contracts in current use are illustrated in the charts in Figure 2.1 but it must be remembered that this is an area in which standard forms play The sum of the risks and responsibilities involved in the executionof the planned project do not change because of the method of con- tractingwhich is adopted. Theyare a functionof the nature of the project itself and its location relatedtothetechnologyto beemployedand the physical and political conditions under which the work is to be executed. What the particular method of contractingchosen will do is to allo- cate the risks as between the parties involved and in so doing affect the likely outcome of the projectintermsof cost,timeand performance. Considering the four methods which have been discussed the advantages and disadvan- tagesof eachare nowsummarized: FULLTURNKEY Advantages 1 Places maximumresponsibilityforthe project in the hands of one organization and mini- mizesthe needfortheemployertoemployhis own resources or engage consultants. It has been the experience of the Department of Transport that the use of design and build contractsfor roads has substantially reduced the staff on site, especially from the consult- ants, with resultant economies in cost. (See the paper given by Tony Holland of the Department at the Conference on the ICE Conditionsof Contract Design and Construct organized by IBC Legal Studies and S e ~ c e s Ltd heldon7December1992.) 2 It should bring about the completion of the project within the shortest possible period of time. 3 By makingthe design part of the competitive tender it encourages innovation and econv- mies and should result in lower projel costs.
- 34. C O NT R A C T P L A N N I N G 1 PROJECT MANAGER 2 CONSTRUCTIONMANAGER Employer I - - - - - - - - - - v A I Designers - - - - - - - - I r _ _ _ _ - - - _ Contractors - - - - - - - - - - - - - - - - - , I Employer 3 MANAGEMENT CONTRACTOR - - - - - - - - - - - - - I I Employer 1 I - - - - - - - - - - - C Figure2.1 Managementcontracting forms of responsibility Project manager I I I I I I I v I I I I Designers Designers Management Contractors - - - - - - - - - - - contractor Works sub-contractors
- 35. T H EC O N T R A C T P L A N 13 4 It should enable economies of cost to be secured by the synchronization of design, procurement and construction so avoiding the delays and diseconomies inherent when designers,purchasingagenciesand construc- tion contractors belongto differentorganiza- tions. 5 It should reducetoa minimum claimsagainst the employer for extras since it is up to the turnkeycontractorto dealwith claimsarising from the delay or bad performance of one sub-contractor on the work of another. This means that the out-turn costs should be very close to the original contract price. However these advantages will only be secured if the employer: Hasselectedthe right turnkeycontractorin the first instance and 'right' here is usually not the apparent cheapest. The technical, managerial and financial resources which the turnkey contractor possesses and is both able and willing to devote to the con- tractareof greaterimportancethan theini- tialprice. Was able at the time of tenderingto define his requirements in sufficient detail to enablethe turnkeycontractorto givea firm price. After contract award does not make sub- stantial and/or recurring changes in his requirements and leaves the turnkey con- tractor to get on with the work without interference either from his own staff or consultants. Of course the employer would be rightlyconcernedto see that the project is monitored to ensure that the work is being carried out in accordance with the contractterms,but he must not start trying to 'second guess' the contractorin terms of design, procurement or construction.This is a temptation which it is often hard for either the employer's own engineers or consultantsto resist. Disadvantages 1 Once the selection of the turnkey contractor has been made there is little opportunity for the employer to correct any mistake in the choice of firm concerned. Accordingly the contract must contain stringent guarantees and penaltiesand theemployer must besatis- fied that he has sufficient financial security from the turnkey contractor to enforce these should the need arise. Such guarantees must coverfitnessfor purpose,withoutthe needfor the employerto establish negligence,and run for a periodlongenough to establish that this requirement has been satisfied- a minimum of fiveyearsfromcompletion. 2 Depending on the size and complexity of the project the employermayfind that his choice of firms to compete for the work is very limiteddueto theincreasedcostsof tendering and the scale of engineering, managerialand financialresourcesneeded. 3 Thecontractpriceisbound toreflect thescale of the risks which the turnkey contractor is accepting, of the resources which he is required to employ and the relative lack of competition. 4 Against the advantages of the 'turnkey' form thereistheundoubted riskthatthecontractor will be influencedin his decisionson detailed design,selection of vendorsand construction methodsprimarilybycommercialfactorsand that the eventual project, while meeting specification, will not incorporate factors of safety or of long-term life of the type upon which a professional consulting engineer would probably insist. This risk will be reduced to the extent that the contractor's obligationscoverthe maintenanceand where appropriate the operation of the facility so that the contractorhasa long-terminterestin thequality,safetyand reliabilityof thefacility, including its impact on the environmentand onthe healthof thoseworkingthere. Thecon- tractor should then be motivated to build these factors into the design of the facility in the first instance. If it is not practical to give the contractor these additional obligations then the employer must require the con- tractor as part of the tender to demonstrate how the contractor's design will take these factorsinto accountover thelife of thefacility and make this an essential element in the tenderassessment.
- 36. I 14 CO N T R A C T P L A N N I N G Designand build Although as indicated above design and build is notstrictlyaturnkeycontractit doeshavecertain oftheadvantagesfortheemployerwhichturnkey contracting possesses. It should reduce the time for completion and produce economies in cost through the involvementof the contractor in the design and the inclusion of at least the detailed designwithinthecompetitivetenderingprocess. PARTIALTURNKEY ~ Advantages 1 For the workwhich is the responsibilityof the turnkeycontractorthen the same advantages applyasfortotalturnkey. 2 Theemployerisgiven theopportunityof con- tracting separately and probably more cheaply for the ancillary work, which is out with the scope of the turnkey contract. This can allow him the chance to give work to smallerlocal firms. ~ Disadvantage 1 The employer must resist the temptation to undertake ancillary works which are neces- sary for the proper functioning of the works being undertaken by the turnkey contractor. If he fails to do this, or is prevented from so doing by local regulations or the method of financing,and the ancillarywork is late, then the employer will have paid in the turnkey ' contract priceforthespeed of constructionof that element but withoutachievingany over- all economic advantages. A typical situation inwhich thisoccursiswherethe turnkeycon- tractisfinancedbybankfinancebut theancil- lary works have to be paid for out of the employer'sown budget and either the money is not available when required or the bureau- craticproceduresinvolvedare such that con- tractscannot beawardedatthe right time. TRADITIONALCLIENTCO-ORDINATED Advantages 1 Theemployerobtainsthe benefitof indepen- dent professional design and supervision of theconstructionof theworks. 2 Each work-package will be tendered for on a basiswhich will ensure the most competitive prices. If the work can be executed under a single main contractthe co-ordinationislim- ited to that between design and construction and between the contractwork and any other associatedactivities. 3 The employer through his consultant or own engineering department retains control over the project and changes can be accommo- datedwithinthecontractualprocedures. Disadvantages 1 Thereisnocompetitionforthedesign. 2 The design will not be complete at tender stage because design input is required from specialist sub-contractors who will only be appointed at a later date under the nomina- tionsystem(seep.144). 3 Thedesign will not incorporateanyconstruc- tion'know-how' fromcontractors. 4 Assuming the use of a traditional form of contract the stage will be set for a display of adversarialism. 5 The contractor will build as instructed but in no sense will own the design or feel any responsibility for it or be concerned as to whether or not it meets the client's require- ments,evenif awareof these. 6 Thereisadiscontinuityinthesupplychain. 7 If there are two or more main contractors involved in the project who are dependent upon one another for information,it must all be channelled through the employer or the employer's consultant thus causing delays and claims. MANAGEMENTCONTRACTING Advantages Savings in time can be achieved in compari- son with the client co-ordinated method without the employer having to commit himself to a turnkey contractor. This can be especiallyvaluablewhere time is short and it is necessary to start construction on one work-package prior to the completion of design on others and 'leap-frog' design and construction while handling the changes
- 37. T H EC O N T R A C T P L A N 15 which this will necessarily involve - what is often referredtoas'fast-tracking'. 2 With constructionmanagement there can be savingsin cost to the employer because of the 'hard-nosed' commercial attitude which the construction manager will bring to the engagement and control of the works con- tractors. This will be accentuated if the con- struction manager is on a bonus for bringing in the project under budget. Disadvantages 1 In the same way as in the client co-ordinated method the employer hasto accept the risk of claims from one contractor by reason of the default of any of the others. His hope is that the managementcontractorwillhaveactedto minimizetheimpactof these. 2 Theemployerwill not knowthe out-turn cost of the project at the start, although he will expectthat the budgetfrom the management contractorshouldbereasonablyaccurate. DECISION CRITERIA This section sets out the factors which can be relevant to the employer's decision as to which methodof contractingtoadopt. METHODOF FUNDING 1 If theclientisabletofund the projectfromhis own resources then, unless otherwise restrained, he is free to adopt whichever method he considers is best suited to provide him with valuefor money over the whole life of thefacility. 2 If the client wishes to obtain finance against thesecurityof the projectitself and the profits which it is expected to generate, then the lenders are likely to insist that it is executed under a turnkey form of contract. This will provide them with the best form of security and can beexpectedtoensurethat the project is completed to time, specification and budget. PROJECTSIZE, COMPLEXITYAND CLIENT RESOURCES 1 If the projectis basicallysimple andlor small- scale relative to the client's resources then there maybeanargumentinfavourof the tra- ditional client co-ordinated method. There will be less scope for innovative design, a lesser advantage to be obtained from design and constructionintegration and the turnkey option would be likely to be more expensive. Against this, however, if there are substantial savings to be made from earlier completion then these may outweigh the other factors and showthat the best overalladvantageis to be obtained either by turnkey or possibly someformof managementcontracting. 2 Inthe oppositecase,where the projectislarge and/or complex relative to the client's resources, the turnkey method will almost certainlybethe most advantageous. TIMEFOR COMPLETION 1 With revenueor cost-savingprojectstheextra value to be obtained from early completion will favour the use of the turnkey or manage- ment contractingmethodsinceeitheris likely to lead to a more rapid completion than the clientco-ordinated. 2 Considerationmust be given, however,to the time taken in the pre-qualificationof bidders and theanalysisof tenderswhichwillbelikely to take longer with the use of the turnkey method. ECONOMY OF DESIGN AND MAINTENANCE1OPERATINGCOSTS 1 The Government appears from Procurement Strategy no. 5 to have made up its mind that design and construct together with, where appropriate,maintain and operate should be the normforcompetitivetenderingasthiswill result in the client getting better value for money over the life of the facility. Com- petitionin design on its own,withoutoperat- ing and maintenance costs being taken into account in tender assessment, would not seem likely to achieve the Government's objective. The contractors when bidding will simply design down to the lowest initial capitalcost which will have an adverse effect onfutureoperatingand maintenancecosts.
- 38. 16 C ON T R A C T P L A N N I N G 2 If this is to be avoided realisticsteps must be taken at the time when tenders are invited to make it clear to the tenderers that operating and maintenance costs over the project's life will be assessed and taken into consideration when making the appraisal. Sadly firms are only likely to believe this when they see it being done in practice. This is permitted under the Public Procurement and Utilities Directives provided that in the tender notice in the Official Journal it is stated that the awardwill be made to the most economically advantageousofferand the criteriaforassess- ment are stated in the notice or in the invita- tiontotender. CERTAINTY OF OUT-TURNCOSTS 1 Provided that the client has made a decision and does not change it later on a lump sum turnkeycontract is the best method of avoid- ing additional costs. It provides the least opportunityforthemakingof variationsorfor interference by the client or the client's con- sultantswiththecontractor'swork. 2 With anyother method, particularlymanage- ment contracting,changesare relativelyeasy to handle and costs have an alarming ten- dency to escalate over original budgets. A management contract which utilizes 'fast- tracking'islikelyto savetime but thecost can be high and if the client's budget is limited and additional funds would be hard to find, then the price needs to be definitivelysettled in advanceof constructionand severe restric- tions placed on the making of changes. This means of course that the design must be settled andfrozenat theoutset. There are management contracting methods in which the price and design are refined in an iterativeprocess of negotiations between the employer and the management contractorand a maximum price established before constructionstarts, but it is difficultto see - other than perhaps quality - what advantagetheyofferoverconventional meth- ods. Certainly it cannot be time and if it is claimed that the employer gains in terms of costfrom thecollaborationbetweenhisarchi- tects and the management contractor then equallyhe loses the price benefit of competi- tivebiddingfrom maincontractors. SUMMARY AND CONCLUSIONS- CONVENTIONAL METHODS 1 Thepreparationof acontractplanisanessen- tial step in the execution of any project no matter howsimple. 2 Thereisnosingleor perfectanswer. Eachplan represents a trade-off between conflicting interests: shorter time against lower capital cost; unified responsibility resting with the contractor against retention of control by the employer; design competition against Rolls Royce standards; employment of local resources against optimum costlcompletion time. 3 The preparation of the plan, because of the trade-offsinvolved,cannot be the workof one department or function. Each must be repre- sented on the planning team and manage- ment are only interested ultimately in the whole;theyare not concernedwiththe bitsor who does them. Unfortunatelyover the years the professions associated with construction wouldseem at timesto haveforgottenthis,so that not only have activities been portioned out between different people when more properly they belonged together, but each portion has acquired merit for its individual worth and not necessarilyfor its contribution to thewhole. 4 Howevermuch he maydelegateto hisconsul- tants or turnkey contractor the ultimate responsibilityforthe projectalwaysrestswith the employer. It is essential therefore that he appoints at the commencement of the plan- ning process and retains throughout the pro- ject an individualto act asthe projectsponsor who has the authority to represent him with all external organizations and to co-ordinate theactivitiesof hisowninternaldepartments. PRIVATEFINANCE INITIATIVE SCHEMES (PFls) Inadditiontothefourmethodsreferredtoabove there is also public private partnerships includ-
- 39. T H EC O N T R A C T P L A N 17 ing PFIs which were referred to earlier. To the extentthat the provision of the services necessi- tates the construction of works, the service provider will finance, design,construct,operate and maintain the works over the period of the contract. The fee for this service is intended to recoup total costs including those of financing and earn the providera profit.Suchschemesare similar to those known as BOOT (build, own, operateand transfer)underwhich a concession- aire is granted a concession, say for a highway, which he finances, constructs, owns and oper- ates and at the end of the concession period transfers the facility back to the principal who granted the concession. During the concession period the revenuesare collectedfrom the facil- ity in order to repay investment and main- tenancecostsand earna profit. Some of the most significant points to be considered in respect of such schemes and the waysinwhichtheydifferfromconventionalpro- curementroutesareasfollows: The party who is contractingwith the public sector is a special purpose organization with sub-contractors undertaking the actual per- formanceof the necessaryworksandservices. The project involves a development or con- struction phase after which the services will be provided. The project is wholly or partly financed by limitedrecoursedebt. The design, construction, testing, commis- sioning, operation, maintenance and perfor- manceof anyasset required for the provision of the service is the responsibilityof the con- tractor. The authority's role prior to contract signature is limited to defining the output requirements,reviewingthecontractor'sfinal proposalsand negotiatingthecontractterms. After contract signature and prior to service commencement the authority's role is reviewing and commenting upon the con- tractor's design and maintenancelopera- tional procedures, observing tests and administering the contract. Specifically the authoritydoesnot approveoracceptdesigns. The contractor is remunerated by a unitary chargefor theservicewhich is paid according to the extent to which the service is available and conformsto the authority's requirements asspecifiedin thecontract. Paymentwillusu- allybein proportiontothe numberof unitsor placeswhich are available. Paymentwill only commence when the service is available. Alternatively payment may be linked to the usage or volume but only in cases where the usage or volume can be predicted bythe con- tractor. The contract must contain a clear definition of what is meant byavailabilitybecausethisis criticalto payment.There must be keyobjec- tive criteria for determining non-availability and the period involved, for example for an accommodation building a failure in the powersupplylastingmorethan halfa day. The authorityshould define the performance whichit requiresfrom the contractorthrough output requirementsand not in termsof how the output is to be achieved, which should be left to the initiative of the contractor. There has to be provision for the authorityto monitor the contractor's performance, although most of the monitoring should be done by the contractor with the authority auditing and periodically checking the con- tractor'sperformance. Any failure by the contractor to meet the ser- vice commencement date can be dealt with through the payment mechanism; there is usuallynoneedforliquidateddamages. Prior to the service commencement date there must be the appropriate tests and inspections, details of which, and who is to assess whether or not the tests have been sat- isfactory,mustbeincluded inthecontract. Therewillbe provisionsforextensionsof time for the service commencement date which are due to the default of the authority. For other events often included in the extension of time clause in conventional contracts, for examplestrikes,there will be no extension of timeoradditionalcostpayabletothecontrac- tor,but hewillberelievedfromtheexerciseby the authority of its right to terminate for the delayintheservicecommencementdate.The risk of such events is otherwise that of the contractortomanageit orinsureagainstit.
- 40. 18 C ON T R A C T P L A N N I N G Force majeureeventsare limited to those of a catastrophicnature,forexamplewar.Thereis a provisionforcompensationto be payableto thecontractorif thecontractisterminatedfor forcemajeure. At the end of the service period the contract must deal with the issueof the transferof the assets. These will often have no alternative use, for example a prison. The contractor will not therefore accept any residual value risk. The authority may wish simply to take over the assets or to re-tender the service. The contract must then provide for the authority's rights in relation to the condition of theassets. Theissueof compensationtothecontractorif the authorityterminatesthe contractforcon- tractor default. This is necessary with a PFI contract as opposed to a normal service contract otherwise the authority could be acquiring a valuable asset for nothing. The contractual provisions are complex Broadly they distinguish between three cases. First where the authority re-tenders the contract and pays to the contractor the proceeds of sale less the authority's costs. Second where the authority chooses not to re-tender, in whicheventtheauthoritypaystothecontrac- tor an assessed value of the amount it would have receivedfrom re-tendering. Thirdwhere theseniorlendersto the projectexercisetheir rights to 'step in' and take over the contract from the contractor.If this can be achieved it isoftenthe bestsolutionfortheauthority.The rightsof theseniorlenderswill becoveredin a direct agreement between them and the authority. In addition to the points specifically referred to above there will be a number of other terms of a type normallyto be found in largeprocurementcontractsbut with modifi- cations necessary to retain the general prin- ciple that it is the contractor's responsibility to manage and operate the contract and the authorityshouldnot interferewiththis. The above is necessarily a brief summary of some of the more significant issues in what is a complex form of contract involving the authority, the contractorand the senior lenders. For further detailed information see HM Treasurypublicationentitled Standardisationof PFI Contracts1999 available from Butterworths, 35ChanceryLane,LondonWC2A 1EL.
- 41. CHAPTERTHREE Legal issuesarisingfrorn the contractplan The legal consequences which arise from the contractualrelationshipsas betweenemployer- contract plan can be considered under four main contractor-sub-contractor may act so as broadheadings: to create a duty of care on the part of the sub- 1 The establishmentof the persons (a)against whom the employer has a right of action in contract and (b)who owe to the employer a dutyof care. 2 The measure of damageswhich the employer may be able to recover against them either in contractor negligence. 3 The nature and extent of the liabilities which the employer may have to other persons either in contractor negligence and the mea- sureof damagesforwhichhe maybeliable. 4 Theeffectof pre-contractualdiscussions. contractor towards the employer in negligence, or to provide the sub-contractor with a defence against a claim by the employer in negligence, but contractually the obligations of the sub- contractor are owed to the main contractor and not to the employer. By his action therefore in deciding to place a single main contract the employer has made his choice as to the party againstwhomhewillhavecontractualrights. However, in practice such rights may well prove to be illusory at the time when the employer wishes to enforce them since by then the main contractor may have gone out of busi- ness. Further, the obligations of the main con- PERSONS AGAINST WHOM THE tractor to the employer may not be such as to EMPLOYERHAS A RIGHT OF ACTION; cover the issue in question. The general rule is AND WHO OWE THE EMPLOYER A clear that a main contractor is liable to the DUTY OF CARE employer for the materials supplied and workmanship performed by a sub-contractor, MA'N CoNTRACToWSUB-CoNTRACToR whether nominated or not, unless such liability The general and historic rule of English law is that a contract only creates rights and obliga- tions enforceable by the contracting parties as against each other. This is now subject to the provisions of the Contracts (Rights of Third Parties) Act 1999 which will be considered in more detail later. It is important to note here however that the new law giving third parties rightsispermissive,inthatitallowsthepartiesto givethem rightsbutalsoallowsthe partiesnot to doso. Forthis reasonit isstillimportantto know the old law. Theold rulehasgiven riseto a num- ber of difficulties in sub-contracting,especially in relation to nominated sub-contractors and suppliers.Theemployer,havingon theadviceof his architect or engineer, selected a particular sub-contractoror supplier,is neverthelessnot a party to the sub-contract between them. The isexpresslylimited bythetermsof themaincon- tract itself. The principle behind the rule is that onlythroughhiscontractwith themaincontrac- tor can the employerhave a contractualremedy for the deficienciesin the sub-contractor'swork or materials and it is for the main contractor to protecthimselfinthewarrantiesheobtainsfrom the sub-contractor or supplier. However where the employer has taken it upon himself to inves- tigate the suitability for his particular purposes of a specialist material - which under its trade name and from a specific supplier he then requires the contractor to incorporate into the works,withoutthecontractorhavinganyrightto object - then the main contractor will not be liableif that material proves to be unsuitablefor its purpose. As to whetheror not the main con- tractor would be liable if the materials supplied
- 42. 20 C ON T R A C T P L A N N I N G were not of a merchantablequalitywould seem to depend on what limitations, if any, were imposed on the main contractoras to the extent of his ability to protect himself against the defaultof the nominatedsupplier. If not onlythe choice of supplier, but also the terms and con- ditions of supply were established by the employer, and these were restrictive of what otherwise would have been the main con- tractor's freedom of commercial action, then it could well be held that any liability on the main contractor for quality was excluded - see the House of Lords decision in Gloucester County Council vRichardson [I96911A C480. The way in which the employermay be pro- tected contractually in the abovecircumstances isif thereis acollateralcontractbetweenhimself and the supplier. Such a contract may be estab- lished expressly in the manner provided for in the JCT80 BuildingContract proceduresby the architectobtainingfrom the nominatedsupplier thedirectwarrantyunderTenderForm TNSl2in favour of the employer. Alternatively where a suppliermakesspecificstatementstoa prospec- tive purchaser about the quality and suitability of his goods,and in relianceon thesestatements the purchaser instructs the contractor to buy them, then a collateral contract may arise between the supplierand the purchaser.Should the goods then prove to be unsuitable the pur- chaser may be entitled to sue the supplier directlyin contract.See ShanklinPier Ltd ~ e t e l Products Ltd [I9511 2 All E R 471, where the employer asked a paint manufacturer whether his paint was suitable below water level and in relianceon hisstatement that it was,specifiedit to the main contractor.In fact the paint was not suitableand it washeld that the paintsupplierin considerationof his product beingspecifiedhad guaranteed its suitability for the job and was therefore liable under this collateral contract with the employer in damages for its breach. This case was cited with approval in Greater London Council v Ryarsh Brick Co. 119851CON L R 85, but in that case the evidencewas such as to showthat theGLCdid not relyon anyspecific statements made by the supplier as to the suit- ability for the use of his particularbricks in the manner in which the GLC architectintended to use them in his design. As a result Ryarsh were held not to be liable to the GLC. The case illus- tratesthedegreeof precisionand reliancewhich must be proved bytheemployerto existin order foraclaimona collateralcontracttosucceed. The Contracts (Rights of Third Parties) Act hasnowprovided the means,if the partiesto the contractsowish,to provide the benefitto a third partyto take advantageof obligationsexpressed in the contract as being owed either to the employer or the main contractor. The Act has fivemainprovisions: l(1)providesthat athird partymayin hisown right enforcea term of thecontractif the con- tractexpresslyprovidesthat he maydoso l(2) provides that the third party may also enforce a term in his own right if the term purportstoconfera benefiton him l(3) states that the third party must be expresslyidentified by name, as a member of a classor asansweringto a particulardescrip- tion but need not be in existence when the contractisformed l(6) provides that the third party can take advantage of any exclusion or limitation clausein thecontractasif he wereenforcinga right 2 protectsthe right of the third partyonce the third party has accepted the benefitor can be showntohaverelied uponit. It is alsoclearfrom theAct that the parties to the contract can expressly provide in the contract that the third partyshall obtain no rights under the contract. This has been done in the 7th edition of the ICE Conditions of Contract and although the JCThas appointed a working party to considerthe matterit hasagreedin the mean- time that all its formsshould contract out of the Act. It clearly would be possible to provide in many contracts,such as those with the builder, nominated sub-contractors or architects, that third partiessuch as future tenants of buildings or financiers to the development would be en- titled to the benefitof the obligationsintowhich such partieshave entered.This would avoid the necessity for a raft of collateral warranties. It remains to be seen whether or not the building
- 43. L E GA L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 21 industrywillbewillingtodothisandat presentit appearssomewhatdoubtful. It is however to be expected that third par- ties, such as sub-contractors,will be interested in using the Act as a defence to a claim against themwhenthemaincontractpurportstoextend to them the protection which it affords to the main contractor. Atypical clause of this type is clause36 of MFll which restricts the right of the purchaser to claim damages attributable to defectsand purportstoextendthat protectionto sub-contractors.UndertheActtherecan nowbe no doubt as to the effectiveness of that protec- tion assuming always the validity of the clause underthe UnfairContractTermsAct 1977. Italsoseemsclearthat intheordinarycaseof an employer, main contractor and domestic sub-contracto'ror supplier, the employer would not beabletoenforceagainstthesub-contractor orsupplieranyof theobligationswhichthatfirm owestothemaincontractorunless,whichseems most unlikely, there was something expressly writteninto the contract. The mere fact that the employer would gain from the sub-contractor's orsupplier's workwouldnotbesufficientto pur- port to confer a benefit upon the employer. In the same way a sub-contractor would have no right against the employer to obtain payment in the event of the main contractor going into liquidation. So far the discussion has been limited to the position of those involved in the construction operationsas it arisesin contract. At the time of writing the third edition of this book it was generally recognized, following the House of Lords decision in Junior Books v Veitchi [1983] A C 520, that under certain circumstances an employer could have a remedy in negligence against a nominated sub-contractor. Although that decision has not been formally over-ruled effectively,it can no longer be regarded as good law after the landmark decision of the House of Lords in Murphy v Brentwood District Council [1991]1A C378. In essence Murphy's case decided that as regardsdefective goodsand buildingsthere was a clear distinction between liability in contract and liabilityin the tort of negligence.In contract a builder is liable to the employer, or the sub- contractorto the main contractor,for his defec- tive work accordingto the terms of his contract. He is, however, only liable to a third party, for exampleasub-contractortotheemployer,inthe tort of negligence for injury to persons or dam- age to other property of the employer.He is not liable to the employer for the defectsin his work itself, no matter the seriousnessof such defects. Defective work which causes the building to be worthlessthan itwould beotherwiseisclassified as economic loss which is only exceptionally recoverableintort. The liability in negligence for injury to per- sons from defective work is reasonably clear. It will extend to cover those persons whom the builder should have had in contemplation as being likely to suffer injury if he does not take propercarein the performanceof hiswork. Liability for damage to 'other property' is more difficult.First, in this context what consti- tutes 'other property'? It seems clear that it would coveritemssuch as computerswhich the employer has installed in the building under a separate contract and which are damaged, say by the fall of a defective ceilingconstructedby a sub-contractor.However, consider the case of a boiler installed by a sub-contractor which explodes and damages other parts of the build- ing. The cost of the replacementof the defective boiler itself is a loss recoverable only in contract and therefore only from the main contractor. If, therefore,the main contractoris not availableto be sued, the employer, or his insurance com- pany, will be left without a remedy. But in those circumstancescan the employer recoverat least thedamagecaused bytheexplosionof the boiler to the remainderof the buildingfrom the boiler manufacturerin tort as being damage to 'other property'? In Murphy's case it was suggested in judgementsgiven by three of the LawLordsthat he could do so providedhe could prove that the explosion was indeed due to the negligence of the boilermanufacturer. The difficulty with this approach, what is knownas 'the complexstructurestheory',is how faritshould betaken.Forthe purposeof defining 'damage tootherproperty' thestructurewillnor- mally be regarded as one unit. So defects in the work of a structural steel sub-contractor which
- 44. 22 C ON T R A C T P L A N N I N G weakentheframeof thebuildingand causedam- age to thefloorsorwallsconstructed bythe main contractor or other sub-contractors will not be regardedascausingdamageto'other property'. The loss occasioned by all such defects is classifiedinlawas'economic loss', i.e. the build- ing is simplyworth less than it would have been had it been properlyconstructed,and economic lossisonlyexceptionallyrecoverablein tort. Whatwould bedamagetoother propertyhas been much debated. It would appear that an electrical sub-contractor whose defective work positively malfunctioned and caused a fire which damagedother partsof the buildingcould beheldliablein negligenceforsuchdamage. There are differingdecisions on the applica- tion of thecomplexstructurestheory. InJacobsv Morton and Partners [I9941 72 B L R 92, it was decidedthatif the part: The only possible exception to the rule, that an employer cannot bring an action in negli- gence against a sub-contractor for economic loss, would be if the employer could rely on a negligent misstatement by the sub-contractor under the ruleestablished bythe Houseof Lords in the case of Hedley Byrne & Co. v Heller and Partners1963 and their later decision in Caparo Industriesplc vDickman and Others1990. In orderto bringsuchan actiontheemployer would have to show that there was 'a special relationship of proximity' between himself and the sub-contractor; that the sub-contractor knew that his advice was likely to be relied and acted upon by the employer without indepen- dent enquiry and it was so acted upon by the employer to his detriment. The factual basis upon which a nominatedsub-contractoror sup- plierisappointedwillnot normallysupportsuch afinding.ThepositionwasstatedclearlybyLord had been constructed by a separate contrac- torfrom the maincontractor Goff in Hendersonv MerrettSyndicatesLtd in the followingterms: had retaineditsseparateidentity,forexample a boiler,and If thesub-contracted work or materials had positively malfunctioned inflicting the do not in the result conform to the damage,forexamplethe boilerhad exploded, required standard it will not ordinarily then the theory could apply. On the other hand in Bellefield Computer ServicesLtd and Unigate v Turner and Sons Ltd [2 July 19991 - see BLISS Construction Law Digest 2000, page 127 - the correctnessof the attempt in the Jacobscase to keep the theory alive was doubted. There a fire stop which had been improperly constructed when the buildinghad been built12 yearsprevi- ously failed and the dairy was damaged by fire. Therewas no contractualor special relationship of proximity between the parties. The claim in negligence was allowed only for items of plant, office equipment and stocks but not for the buildingitself orforlossof profits. Effectively, however, the decisions in D & F Estates (seep. 173) and Murphyhave largely put an end totheexpansionof thescopeof thelawof negligenceas regardsthe ability of employers to claim damagesfromsub-contractorsforthecon- sequencesof theirdefectivework. If not formally over-ruled, the decision in Junior Books is no longeran authorityon whichany reliancecan be placed. beopen to thebuilding owner tosuethe sub-contractor or supplier direct under the Hedley Byrne principle claiming damagesfrom him on the basis that he has been negligent in relation to the pelfonnance of his functions.For there is generally no assumption of responsi- bility by the sub-contractor or supplier direct to thebuildingowner, the parties having so structured their relationship that it is inconsistent with any such assumptionof responsibility. It is indeed more likely that, if the nominated sub-contractor in order to secure his nomina- tion has madeexpressrepresentationsabout the qualityor performance of the product that he is supplying,which might possibly justify a Hedley Byrne liability in negligence, the same facts would support a claim in contract for breach of an implied collateral warranty on the principle of the Shanklin Pier case,which would be easier to establish. The obvious solution in practice is for the employer to obtain from a nominated
- 45. L E GA L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 23 sub-contractor or supplier an express collateral warranty(seefurther p.31). Englishlaw proceedson the basis of a chain of contracts running from the employer to the main contractor, from the main contractor to a sub-contractor and on again to sub-sub- contractors or suppliers. It is assumed that each in the chain will be able to recover for the eco- nomiclosssufferedbyhisco-contractant so that this loss will ultimately fall on the genuinely defaulting party. So in the Young and Marten caseit wassaid that 'If the employercan recover damages the contractor will generally not have to bear the loss since he will have bought from a seller who will be liable...and if that seller had in turn bought from someone else there will again bea liabilityso that there will bea chain of liability from the employer who suffers the damagebacktothe author of thedefect'. Unfortunately life in the real world is not so simple. It is often the case that the chain has a weak link - the overseas firm with no assets within the court's jurisdiction or the contrac- torlsub-contractor with no funds. As a result of the recent reversal of the trend of allowing actions in negligence for the recovery of eco- nomic loss where proximity and reliance could beestablished,a breakin the chainwill normally mean that the party suffering the loss will have no opportunity of recovering it from the true defaulter, unless he has protected himself by an appropriately drafted collateral warranty. This is even more the case when the parties have constructed their contractual relationships in such a wayas to showtheir exclusivereliance on contractual remedies. In Greater Nottingham Co-operative Society v Cementation Piling and FoundationsLtd [I9891Q B 71,it was decided by the Courtof Appealthat wherethe employerhad taken a collateral warrantyfrom a sub-contrac- tor which was limited to design and selection of materials, but did not extend to workmanship, the employer could not recover financial losses whichwereduetothewayinwhichthesub-con- tractor had negligently executed the works. The direct contract in the form of the collateral warranty was considered as being inconsistent with any assumption of responsibility by the sub-contractor, certainly for economic loss, beyond that which he had expressly under- taken. In Simaan General Contracting Co. v Pilkington Glass Ltd [I98811 QB 758,specialist glass window units had been supplied by Pilkingtons to the installation contractor Fed who were sub-contractors to the main contrac- tors Simaan Contracting for a new building in Abu Dhabi.Thecolouringof the unitswasdefec- tive and ultimately they were rejected. Simaan then brought an action in negligence against Pilkingtonsinstead of suing the sub-contractors Fed for breach of contract.TheCourt of Appeal, in rejectingthe claim,tookthe viewthat the par- ties having deliberately formed a chain of con- tracts, main contractor with the installation contractor and installationcontractor with sup- plier, must be assumed to have contemplated that any claims would be made down the con- tractual chain and not short-circuited by an action in tort. There was no evidence that Pilkingtonshad everassumedanydirectrespon- sibilitytowardsSimaan. It followsfrom these cases that in establish- ing his contractual arrangements the employer, if hewishesto haveany rightsto recoverfor eco- nomic loss against a party with whom he would not normallyhave any contractual relationship, for example a sub-contractor, must do so expressly in contract. He may do this either by requiringthat thesub-contract expresslyentitles him to do so under the Contracts (Rightof Third Parties)Actor bywayof a collateralwarrantyand that he must ensure that the terms of the collat- eral warranty cover all the obligations of the partyconcerned. PROFESSIONALADVISERS English law has long drawn a distinction betweenthe obligationsin contract of a contrac- tor or supplier and the obligations of a profes- sional man. In general the obligations of a contractor or supplier are strict; that is to say they are not based on fault and it is no defence that all reasonable care was taken. If in a con- struction contract the contractor is responsible for design then, unless the contract provides otherwise, the contractor is strictly liable for
- 46. 24 C ON T R A C T P L A N N I N G designand the works must be fitfor the purpose for which theywereintended.Theobligationsof the professional man however,in the absenceof anyexpressterm in the contractto the contrary, or a warranty which the courts are prepared to implyasa matterof fact,areonlyto'carry outthe service with reasonable skill and care' (s. 13 of theSupplyof Goodsand S e ~ c e s Act 1982)or as it has been describedin thecourtsto bringto the task 'the standard of the ordinary skilled man exercising and professing to have that special skill'.The question whether reasonable skill has been exercised or not is a questionof fact which in practice largely rests upon whether or not other people in the same profession being per- sonsof skilland experiencewould have behaved in the samewayor not havingregard to thestate of knowledge existing at the time. This is not, however,in anywaya rule and if,exceptionally, what is common practice in the profession is judged to be negligent then the professionalwill as it has been put 'pay for the sins of his profes- sion'. The normal obligationthen of a professional man does not extend to guaranteeinga result. If there is to be such a guaranteethen there has to be an express term in the contract to that effect, or the court must find on the evidence that the contract includes a term implied as a matter of fact that the professional man is responsible that the works are fit for the purpose intended. Suchatermwillnot beimpliedasa matterof law where the contracting party is a professional man providingonly advice or designs, i.e. with- out supplying any product (George Hawkins v Chrysler and Burne [I9861 38 BLR 36). Nor, somewhat more strangely, does it appear that even if the professional person in question actually possesses a higher than normal degree of skillis he to be judged bythat higherstandard. There is apparently no stricter liability than that of 'ordinary' negligence (see Wimpey Construction UK Ltd v Poole, The Times 3 May 1984). However where the design is linked to con- struction, as in a packaged deal contract, the obligationsas to design and constructionwill be considered as an integral whole and since the object of such a contract is normally to provide the employer with an entire installation capable of achieving a specified result, the liability for design will be based on fitness for purpose regardless of negligence or fault and if such a term is not expressly included within the con- tract it will be implied (seeViking Grain Storage Ltd v T.H.White Installations 3 CON LR 52, fol- lowingthe decisionof theCourtof Appealin IBA v EMI ElectronicsLtd & BICC [I9781 11 BLR 29). While the House of Lords did not expressly decide the point when that case came before them, since reversing the Court of Appeal they found the design to have been negligent, their speeches indicate general agreement with the Court of Appeal on that issue. As regards the position of a consulting engineer employed by the main contractor in such a case to perform the design, if he is provided with all necessary information as to the purpose for which the installation is required, then in the absence of anyexpressprovision to thecontraryaterm may be implied in fact in the contract between the packagedealcontractorand theconsultant,that theconsultant'sdesignwillsimilarlybefitforthe purpose intended without proof of negligence (seeGreaves v Baynham Meikle [I9751 3 All ER 99). It is to be noted that in the Greaves case the term was implied in fact based on the evidence of theintentionof the parties. THE MEASUREOF DAMAGES The measure of damages which the employer may be able to recover from the defaulting party will differ according to whether the claim is against the main contractor in contract or against the sub-contractor in negligence, to the extent that the employer is still entitled to make any such a claim having regard to the decisionsin MurphyandD&FEstatesreferredto earlier. DAMAGESIN CONTRACT Thebasicprinciplesmaybestated asfollows: 1 Damagesare compensatoryand theobjective is to put the injured party, so far as money can,in thesamepositionasif thecontracthad been performed. It follows from this that
- 47. L E GA L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 25 damages can be recovered for the loss of expectations arising out of or created by the contract. It is on this basis that an employer can -in principle and provided they are not too remote- recover damages for his loss of profits arising from works which do not per- form according to specification and not merelyforthecostsof puttingthem right. 2 Thereare two alternative basesof assessment which may be applied in contracts for engi- neeringworks. The one has been referred to as the 'difference in value' and the other 'the costof cure'. Ingeneralitwouldappearthat in the event of the contractorfailing to perform the work correctly in accordance with the specification the assessment will be on the basis of 'the cost of cure' and this maystill be so even if it resultsin theemployereventually being placed in a better position than he would have been had the original contract been properly performed. So when a factory wasburnt down becauseof the breach of con- tract by the contractor the employer recov- ered the full costs of rebuildingeven though that gave him a new factory. However if the loss sustained does not extend to the need to reinstate then it would be unreasonable to award the costs of reinstatement since the award of damages is to compensate for the loss. This was decided by the House of Lords in RuxleyElectronicsvForsyth [I99611A C344, where a swimming pool had been con- structed with a maximum depth less than what the defendant must be presumed as a reasonableman to have known at the time of entering into the contract. In making that assessment it is appropriate to take into account the capacity in which the defendant contracted. So an experienced contractor erecting a block of flats for a property developer must be presumed to know that the employer intended to let them at a profit. Accordingly,if he islate in completion he would be liable to compen- satethedeveloperforsuchlossof profitsas werereasonablyforeseeable. .anyactualknowledgewhich the defendant possessed at the time of entering into the contractand on the basisof which he must be presumed to have contracted. This is obviously reasonable in that such know- ledgewould haveallowed himtheopportu- nity of protecting himself against the risk by, say, taking special measures to ensure completion on time,or coveringhimself by insurance against the consequences of defectivedesign. So if the contractorin the example above was specificallyadvised by the developerat the time of tenderingthat the building was for occupation by, for example, foreign embassystaff who would be payingexceptionallyhigh rents,then he would be liable to pay damages based on those rents were he to fail to have the flats ready for occupation by the contractual date. specified. The cost of rebuilding was esti- mated at £21 650.Therewas howeverno need 4 Contributory is a defenceto a to reinstate.Itwasa perfectlyserviceablepool for damages founded On a breach of a into which it was safe to dive, although its strict contractualobligation. So where a con- depth was not according to specification. tractor had amongst other obligationsunder- Held, that the award of damages should be taken that Itheir materialsand workmanship based on the loss of amenitywhich the wouldbethe bestof theirrespectivekinds' the judgehaddecidedwas£2500. damages suffered by the employer could not 3 The damagesmust not be 'too remote'. Since be reduced because of alleged the decision of the House of Lords in The the employer to disregard his own interests H~~~~ 11 [1969] AC 350 (under the name (BarclaysBank plc v Fairclough Building Ltd, Koufos v C. CzarnikowLtd),theloss must be a TheTimesl1Maylgg4). 'serious possibility',and it isonthat basisthat incontractthewords'reasonablyforeseeable' DAMAGES IN NEGLIGENCE must be interpreted.What is a 'serious possi- The general rules may be stated briefly as fol- bility' willdepend upon: lows:
- 48. 26 C ON T R A C T P L A N N I N G 1 Once negligence has been established then the person responsible will be liable for the damages which are of a type which were rea- sonably foreseeable or a probable con- sequenceof hisact. It isnot necessarythat the actual detailed circumstances should have been reasonably foreseeable provided that thegeneralcategorywasso. 2 Provided the damages were of a type which was reasonably foreseeable then it is irrele- vant that the actual extent of the damage or loss which occurred was reasonablyforesee- able. Compensation is payable in respect of theharmwhichwasactuallysuffered. 3 In principle the person who has suffered as a result of the negligent action is entitled to be putintothesame position-sofarasanaward of damages can - as he would have been had the negligentact notoccurred. DISTINCTIONBETWEENCONTRACT AND NEGLIGENCE Themain pointsof distinctionare: 1 The 'foreseeability' test in contract is stricter than it is in negligence. In contract it is not a question of 'reasonable foreseeability' as it is in negligence but as 'not unlikely' or 'serious possibility' in the contemplation of the par- ties. It is the subjective element of the con- templation of the parties in contract which makes the difference. The strictertest in con- tract is justified because it is always open to the one party to bring to the attention of the other at the time when the contract is made the special risk against which he wishesto be protected. No such opportunity occurs in negligence. 2 Contributory negligence can operate as at least a partial defence where the cause of actionisfoundedin negligenceorcouldbe. 3 In contract the award of damagesis intended to put the partyin the same position,so far as it can, and within the rules as to remoteness, as if the contract had been performed. The award of damages in negligence is intended to puttheinjured partyinthesamepositionas if the negligent act had not happened. So in an action for negligent misrepresentation thedamageswould bebasedonwhatthe posi- tion would have been had the misrepresenta- tion not been made. In an action in contract for misrepresentation the damages would be based on what the position would have been hadthemisrepresentationbeentrue. NATURE AND EXTENTOF THE EMPLOYER'S LIABILITIES The obligationsof the employer in contract will ingeneralbeset out expresslyin thetermsof the particular contracts into which he enters. Howeverthereare certainobligationswhich asa matter of lawwill be implied and are of particu- lar significanceto the state of contract planning. Theseare: 1 It is an implied term of any construction con- tract that if the performance of the contract requires the co-operation or action of the employer then the necessary degree of co- operation or action will be forthcoming. It seems doubtful if this particular implication can be negated by the express terms of the contract. 2 Followingon from (1)if the employer under- takes to supply drawings, instructions or approvalsthen there is an implied obligation that such will be given in a reasonable time and so as to enable the contractor to comply with hiscontractualobligations. 3 Again following on from (1)if the employer undertakes to supply components to a con- tractorfor incorporationinto the works there is an implied obligationtheywill be supplied intimetoavoid disruptionand delay(Thomas Bates v Thurrock Borough Council Court of Appeal 22 October 1975). It was admitted in thisbytheCouncilthat therewasadditionally an implied term that the components would be of good quality and fit for their intended purpose. 4 Thereis normallyno impliedwarranty by the employeras totheaccuracyof thedocuments forming part of the invitation to tender or even as to the feasibility of constructing the works as designed. The facts of the case may show, however, that instructions by an
- 49. L E GA L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N employer to design the works on a certain hypothesisamounted to a warrantythat such hypothesis accorded with the actual ground conditions (Bacal Construction (Midlands) Ltd v Northampton DevelopmentCorporation [I97518 BLR88). The attempt is very often made by employers,andindeedbymaincontractorsin dealing with sub-contractors, to limit the I scope of application of any such implied ~ obligation by providing that any information given is not guaranteedand it is the responsi- bility of the recipient to check it for himself. The following comments are made as to the legaleffectsofsuchattempts: If the facts of the case show that the ten- derer~ were intended to rely on the infor- mation provided as regards the soil conditions, and did so rely and thereby suffered loss because the information had been negligently prepared, then the con- sulting engineerswho prepared such data may be liable to the contractor under the principle established by the Hedley Byme case. This may be so even if there is a dis- claimer in the bidding documents which protects the employer but not specifically the consultants, i.e. any disclaimer clause will be construed strictly against the party imposing it. In deciding upon whether or not it would be reasonableto imposesuch a duty in tort, the court may take into ~ account the practicalitiesof the tenderer's ability to undertake any investigations for himself. In the Canadian case of I Edgeworth Construction v ND Lea & Associates and Others [I9931 66 BLR, the Canadian Supreme Court took into account, in finding that a duty of care existed on the part of the consultants, the fact that the bidders had about two weeks in which to file their tenders and the con- sultants had spent two years on the prepa- ration of the engineering design and information. Although there was no disclaimer pro- tecting the consultants in that case it is thought that, if on the same facts an English court reached the same con- clusion on the existence of a duty of care, then it seems unlikely that they would uphold the validity of any such disclaimer underthe UnfairContractTermsAct. If the misrepresentation is made fraudu- lently,which meanseither (a)knowingit to befalse, or (b)without belief in its truth, or (c)recklesslynot caringwhetheritistrueor false, then no disclaimer clause will act to protect the person making the misrepre- sentation and thisapplieswhetherthe mis- representationwas made by the employer or his agent. For this purpose the House of Lordshavesaid principalandagentare one (PearsonLtd v Dublin Corporation [I9071 AC351). If the information given amounts to a mis- representation then under the Mis- representation Act 1967, as amended by the Unfair Contract Terms Act 1977, the employer will be liable to the contractor indamagesunlesshecanshowthat'he had reasonable grounds to believe and did believeup to the time that the contractwas made that the facts representedwere true', and further that the disclaimer clause in the contract satisfies the requirements of reasonableness as stated under s. ll(1) of the Unfair Contract Terms Act. The important point is that in each instance the burden of proof is on the employer bothasregardsestablishinghisbelief inthe factors and showing that the clause was reasonable. TheemployerwillbeheldliableundertheActfor a misrepresentation made by his agent, which would cover the case where it was made by his consultants.It would not therefore appear to be a defence for the employer to argue that he had employed and relied on professionaladvice. Nor would it be a defence for him to argue that it would have cost too much time and money to establish the truth (Court of Appeal in Howard Marine and Dredging Co. v A Ogden & Sons (Excavations)Ltd [I97719 BLR34):'In thecourse of negotiations leading to a contract the statute imposesan absoluteobligationnot to state facts
- 50. C O NT R A C T P L A N N I N G which the representor cannot prove he had reasonablegroundsto believe.' As regards establishing that the disclaimer clauseisreasonablethenitisconsideredthatthe court would take into account the complexity, time and cost of investigating and verifying the data provided,withinthe periodallowedfor ten- dering,together with the significanceof the data to the tenderer and would be likelyto hold that, unless the investigations needed were of the simplest,a clauseseekingtoestablisha totaldis- claimer did not satisfy the test. Thus on a case decided before the Act it was held to be unreasonable to require a tenderer who had seen two trial holes to search an overgrownsite to find three others of which they were not aware! (Bryant& Son Ltd v Birmingham Hospital SaturdayFund [I93811A l lER503at p. 21). It is recognized that a contractor who has under-priced a job for reasons unconnected with the data supplied may neverthelessseek to useanyinaccuracyinsuchdataasa meansupon which to found a claim. However the fact that such a possibilityexists provides in the author's view no justification for seeking to imposeupon tenderersobligationswithwhichin practicethey clearly cannot comply. Furtherit must be to the employer'sadvantagethat the contractstarts off with the contract price based assecurelyas pos- sible upon the conditionswhich will actually be met when the work is performed. Whilst it is in the nature of soils investigationwork that there can be no guarantee that this will be the case thereissurelyeverythingto besaidforsuchwork beingcarriedout with the maximum of care and to an extent sufficient to reduce so far as prac- ticable the possibilityof unpleasant and expen- sivesurprises. EMPLOYER'S LIABILITYFOR DAMAGES clause 28.2, then this will be interpreted as equivalent to the damages which would fol- low directly from a breach of contract and would include therefore the contractor's loss of profit Wraight Ltd v P. H. & T. (Holdings) Ltd 13 BLR 26). The court in fact allowed 10 per cent for establishmentcharges and profit which the contractor would have earned on the contract had it not been determined and 12% per cent for a proportionof his overhead costsattributabletothecontract. 2 Head office overheads in terms of additional managerial expenses required in attending to the problems caused by the employer's default can be recovered in a claim for damages provided they are properly quanti- fied. It is not sufficient merely to add a percentage to the direct costs gate & Lyle Food & Distribution Ltd v GLC [I98211 WLR 149). 3 If under thetermsof thecontract,forexample JCT80 clause 26, as a result of the actions of the employer the contractor is prevented from utilizing his resources on other work, and can prove that he could have done so, then the anticipated loss of profit on such other work is recoverablefor the periodwhen he was so prevented (Peak Construction Iliverpool) Ltd v McKinney Foundations Ltd [I9701 1 BLR 111). Under the 6th and 7th editionsof the ICE conditionsthe term 'costs' is defined as 'all expenditure properly incurred or to be incurred whether on or off theSiteincludingoverheadfinanceand other charges properly allocable thereto but does not include any allowance for profit'. Howeverunder a changefrom the5th edition the contractor under clause 42 (delayby the employer in giving possession of the site) is entitled to his additional costs together with Thegeneralissuesrelatingtodamagesdiscussed an'additionforprofit'. 4 The term 'direct loss and/or expense' under earlier in respect of the contractor apply with the JCTform of contract includes interest or equaleffectto theemployerbut therearecertain specificissueswhich mayariseout of a breach of financing charges and these will be assessed on the same basis as the bank assessed such contract by the employer which need noting. Theseare: chargeson the contractor,i.e. with periodical 'rests' at which point the interest outstanding 1 Wherethe contractusesthe term 'direct loss/ was added to the principal (F.G.Minter Ltd v expense' or 'direct lossldamage' as in JCT80 Welsh Health Authority Technical Services
- 51. L E GA L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 29 Organisation [1980113 BLR: Rees and Kirby v SwanseaCityCouncil [I9851CILL188). 5 The useof the expression'consequential loss' in a clause seeking to limit liability will not prevent the recoveryof those damageswhich flow directly and naturally from the breach and these will include loss of profit (Millar's MachineryCo. Ltd v David Way & Son [I9341 confirmedbytheCourt of AppealinCroudace ConstructionLtd v CawoodsConcreteProducts Ltd [I97818 BLR 20).Theterm'consequential' means 'merely consequential' and 'some- thing not the direct and natural result of the breach'. The meaningof 'consequential loss' wasfurtherconsidered bytheCourt ofAppeal in British Sugar plc v NEZPowerPlant Projects Ltd [I9981 87 BLR 42. There the contract included the words 'the seller's liability for consequential loss is limited to the value of the contracts'. It was held by the court that following the two cases mentioned above the termdoesnot applytodamageswhichflowed naturally and directly from the breach of contract. What it did refer to were damages whichwouldflowfromspecialcircumstances known to both partiesand wouldcome there- fore within the second limb of Hadley v Baxendale.Thedistinctionisshownclearlyby Victoria Laundries v Newman 1949 where it was held that the contractors who were late must be taken to have known that in the ordinarycourseof eventssomeloss of normal profitswouldfollowfromtheirlate deliveryof a boiler requiredfor productionpurposesand sowereliablefor thatloss.Howevertheywere notliableforanexceptionallossof profitssuf- fered by the laundry as a result of their not securingcertainextremelylucrativecontracts becauseof the delay,sincetheyhad noknowl- edge of these contracts. The normal loss of profits were assessed by the laundryat £16 a week and the exceptional profits at £262 per week. LIABILITYOFTHE EMPLOYER IN NEGLIGENCE As between the employer and the main contrac- tor the question of liability in negligence is not one which should often arise. Although it was stated by Lord Goff in Henderson v Merrett Syndicates Ltd that an assumption of responsi- bility coupled with the concomitant reliance may give rise to a duty of care in tort, so that the claimant maychoose that remedywhich is most advantageous to him, it seems that the duty of care in tort will not be greater than that under- taken contractually. The only advantage there- fore to the claimantby bringingan actionin tort is to take advantage of the longer limitation period which may apply in tort as opposed to contract.' In so far as the parties have set out in some detail their respective rights and obliga- tionswithinthecontract betweenthem then it is tothecontractualtermsthat referenceshouldbe madewhenanydisputearises. Itwouldseemthatanemployerwould not be liable in tort for the acts of his architector engi- neerif,asa professionalman,hewasactingasan independent consultant. He would then be in the same position as any independent contrac- tor. However in an action under the Mis- representation Act 1967 it is thought that an employer would be liable if the independent architector engineerlacked reasonablegrounds for his belief. Hewouldalsobeliableat common law for fraudulent misrepresentation by the independent professional. In many instances architectsorengineersarenotindependentcon- sultants but employees of the employer and in these circumstances the employer could be vicariously liable for their negligence. Further, even when the architect or engineer is an in- dependent consultant, the influence increas- ingly exercised by administrative and financial departments in the employer's organization mayresultinithappeningthat: the exercise (by the architectlengi- neer) of his professionalduties is suf- ficiently linked to the conduct and attitude of the employer that he becomestheagentof theemployersso as to make them liablefor his default. In the instant case the employers through the behaviour of the council and the advice and interventionof the town clerk were to a l l intents control- ling the architect's exercise of what
- 52. 30 C ON T R A C T P L A N N I N G should have been his purely profes- representationis any statement of fact made by sional duty. In my judgement this was one party to the other before the contract is the clearest possible instance of made and which inducesthe person to whom it responsibilityfor the breach attaching is madeto enter into the contract. The represen- totheemployers. tation must be as to a matter of fact and not just (Reesand KirbyvSwanseaCityCouncil an assertionof opinion. However if the opinion inthe HighCourt) is expressed by someone having or claiming Although at one time it was thought that an architect or engineer owed a duty of care to a contractor who would be affected if the archi- tectlengineer were negligently to under-certify the value of his work, this now seems doubtful following the decision of the Court of Appeal in Pacijic Associates v Baxter [1990]QB 993. The contract in that case contained an arbitration clauseand a disclaimerof the defendant'sliabil- ity. In essencethe decisionseemsto haveturned on the structure of the contractualrelationships between the parties and the fact that the con- tractorcouldclaim againstthe employer in arbi- tration. Assuming the contract contains an arbitra- tion clause, then it would seem that a claim by the contractoragainstthearchitectlengineerfor under-certification would only be likely to suc- ceed if thearchitectlengineerwereto haveacted deliberately in contravention of the contract with the intent to deprive the contractor of moneyto which he knewthat thecontractorwas I entitled.Thiswastheviewof the Court of Appeal in Lubenham Fidelities v South Pembrokeshire DC (see6 Con LR at page114). PRE-CONTRACTUAL DISCUSSIONS These may affect the relationships between the partiesbecauseof: 1 Representations. 2 Collateralwarranties. 3 Theissueof Lettersof Intent. REPRESENTATION The problem of misrepresentation has already been discussed in relation to one of the areas in which it is most likelyto arise, namelythe giving of data relating to site and soil conditions, and the principlesset out there are of generalappli- cation. However it is worth emphasizing that a special knowledgeor skillin relation to the mat- ter in question,or if by implication it is founded on facts,then it willstill betreatedasa represen- tation. In practice therefore, when inviting ten- ders an employershould be extremelycareful as to the data which he provides to the tenderers. Unlessthe mattersare oneswhich it is impracti- cal to expect the tenderers to find out for them- selves, it is far better simply to make it clear that it is their business to find out the infor- mation they require in order to bid. It is also a point which needs watching when conducting bidders' conferences, or answering bidders' questions. Thegeneralpositionastoliabilityfor misrep- resentation can be summarized briefly as fol- lows: If the representation is fraudulent (for the meaning of this see p. 27),then the remedyis damagesand recission. If the representation is made negligently, i.e. carelesslyand in breachof a dutyof care,then the remedyisdamages.If the employer,or his architectlengineer, professes to have special knowledge or to have made particular en- quiries, say about the soil conditions, and fromthe wordingof the enquiryit isclearthat the contractor was intended to rely on such information and doesso rely,and it proves to be inaccurate so that the contractor suffers damage,then the contractormayhave a rem- edy for negligent misrepresentation.This lia- bility may be negated by wording in the enquiryto the effectthat the contractoris not to relyon anyinformation given for which no liability is accepted but is to make his own enquiries as to the site conditions. It is thoughtunlikelyin commercialcontractsthat sucha clausewould beregardedas unreason- able under the Unfair Contract Terms Act 1977. It may,however,arise out of a commer-
- 53. L E GA L I S S U E S A R I S I N G F R O M T H E C O N T R A C T P L A N 31 cial relationship if one party acts on the special knowledge and expertise of the other and it should have been foreseen that he would do so. Thus when a sales manager on his employer's behalf provided a tenant of a petrolstation with a statement as to potential turnover on which the tenant relied, it was heldthat thecompanyowed thetenant aduty of care (Esso Petroleum Co. v Mardon [I9761 QB801). 3 The statutory liability as already discussed under the MisrepresentationAct1967. COLLATERALWARRANTIES A collateral warranty normally arises when an undertakingisgivenduringcontractualnegotia- tions as to some matter, which is intended to have contractual effect, but which is not included within the contract terms, and indeed may even be in contradiction to them. In the usual course of negotiations betweenthe parties statements will be made and requestsfor infor- mation answered and it is a matter of fact to be determinedin each case, whether or not looked at objectively there was a clear intention on the part of the parties that such statements or responsesshould constitute contractualobliga- tions. Theattitude of thecourtsin generalis that the existence of a collateral warranty is to be the subject of strict proof (see the comments of Viscount Dilhorne in IBA v BICC [I9801 14 B L R1). In the Esso Petroleum v Mardon case the CourtofAppealalsoheldthattherewasa breach of a contractualcollateralwarrantythat the esti- mate of turnover had been prepared with due care. Following the Murphy and D & FEstatesde- cisions,collateralwarranties have nowassumed a far greater importance. Since effectively the employer has no remedy in tort against a defaultingsub-contractorfordefectivework,the LETTERSOF INTENT The best advice which can be given to any employer contemplatingthe issue of a Letter of Intent is 'don't, or if there are compellingcom- mercial reasons then exercise the greatest of care'. In so far as the Letter merely expressesan intention to award a contract and nothing more is either said, written or done, then since the Letter on its own creates no contractualobliga- tions on either party, and is of no binding effect, it can be argued that the employer had done himself no harm except to weaken his negotiat- ing position when it comes to the contract. However, the purpose of issuing the Letter of Intent is almost always that something is to be done for which the contractor wants the assur- ance of payment and once the Letter has been written furtheractionsand correspondencewill follow. Wherethis is the case and the contractor actually performs preliminary work for the employerthenthe employerwill beliableto pay for it even if the project never actually proceeds (TuriffConstruction Ltd and Turiff Ltd v Regalia KnittingMilk Ltd [I97119 BLR20). The alternative situation can, from the employer's viewpoint, be even worse: where at the employer's requestwork is started and com- pleted on the basis only of a Letter of Intent because the parties never finally agreed a con- tract. The contractwork having been performed at his requestthe employeris bound to payforit on a quantum meruit basis but no contract ever having been concluded the contractor is under none of the normal obligations for quality of work, delivery on time and so on, which would either be implied by law or form part of the expresscontractterms (BritishSteelCorporation v Cleveland Bridge and Engineering Co. Ltd [I98411All ER504). CONCLUSIONS only way in which he can protect himself is From this brief survey of certainlegal issues the eithertoobtainfromthesub-contractora collat- followingconclusions relevant to the subject of eral warranty or to ensure that he obtains the contractplanningcan bedrawn: benefit of the warranties given by the sub-con- tractor to the main contractor under the 1 The employer is in the best legal position as Contracts(Rightsof Third Parties)Act 1999 (see regardsminimizing his own risks and placing Chapter16, pp. 144-1481. the maximum liabilitieson the contractor by
- 54. 32 C ON T R A C T the placingof a turnkeycontract. Howeverhe must be sure that the turnkeycontractor has the necessary financial resources to support the responsibilities he is accepting;that he is worth 'powder and shot' if it should ever cometolegalactionoreventhethreat of it. 2 That if the employer wishes to separate out design from construction or manufacture, then he should seek from the designersguar- antees that their designs will produce the results intended, if constructionlmanufac- ture is properly executed, and give to the designer the responsibilityfor supervision of constructionlrnanufacture.He should not be content to relyon the traditionalobligationof the consultant to use reasonable skill and care. 3 The methods of contracting referred to in Chapter 2 as 'client co-ordinate# and 'man- agement contracting' impose on the employer the liability towards each contrac- tor of the consequencesof the default of any other. In separating out the contracts the employer should seek to minimize the num- ber into which the project is divided and should considercarefully the extent to which he can obtain indemnities enforceable in practice, at least from firms responsible for keyareasof thework. I 4 If the employer either directly or through another designerlcontractorlsupplier has accepted the responsibilityfor the supply of drawings, data, components or other ser- viceslfacilities, then he should select either the company supplying the itemlservice in questionor the one receivingit,to be respon- sible for its suitability,quality and deliveryto time. Clearly if the employer is supplying the itemlservice directly himself then, if at all practicable,he should place that responsibil- itywiththe recipient. The employer must identify and place responsibility for positively managing the interfaceon thef i r mmost appropriateforthe task and be sure again theyhavethe financial backingshouldthingsgowrong.Howeverit is to the employer's legal advantage to seek to reduce to a minimum the provision of such itemslservices. Some will be unavoidable,as P L A N N I N G for instance soil investigation reports when invitingcompetitivetendersforconstruction, but supply of free-issue items rarely is - and should beavoided. 5 It is to the employer's legaladvantageto place the responsibilityforsub-contractorsfirmlyin the hands of the main contractor and to play no part in their selection or to know of the termson whichtheyhavebeenemployed.It is recognized that with the complexity of mod- em contracts, and the extent of sub-contract- ing which takes place, there may be technical orcommercialreasonswhytheemployerdoes wishto get involved,but he must beverycare- fulnottodilutethe responsibilitiesof themain contractor while at the same time ensuring that he has an effective remedy against an importantsub-contractorthroughthe useof a collateralwarrantyor the use of the Contracts (Rightsof ThirdParties)Act1999. 6 If for commercial reasons the employer wishes to make use of the nominated sub- contractorlsupplier system then he should ensure that he has direct contractual rights against the nominated firm in the event of their failure to perform, and not rely on the possibilityof beingable to prove either negli- gence or breach of an implied collateralwar- ranty. The JCThave to their credit recognized and sought to tackle most of the problems of nomination (except re-nomination see post p. 145) buta studyof theirrecommendedpro- cedures and forms shows the complexities intowhich the supposedadvantagesof nomi- nationlead.Againtheemployershouldsatisfy himself on the financial resources of the firm in questionand if necessaryinsist on the pro- visionof a bond. 7 Theemployer must beconsciousof theliabili- ties which he is accepting towards his con- tractors either in contract or negligence and whether due to his own default or that of his consultants. While as suggested above he shouldseek to lay theseoff asfar as he can on others who possess the requisite financial resources, he should assess the residual risks and liabilities which remain with him, and what provision he needs to make in his financingtocoverthem.
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- 56. “Yes, and Idid warn you, lad. It is the talk of every set I’ve been into lately. There is nothing against her, but her position with that miserable hound, Dellatoria, is well- known. He insults her with his mistresses time after time. Her beauty renders her open to scandal, and they say what I feared is true.” “What? Speak out.” “That she is madly taken with our handsome young artist.” “They say that?” “Yes, and I gave them the lie. Last night I had it, though more definitely. I was at the Van Hagues—all artistic London goes there, and a spiteful, vindictive woman contrived, by hints and innuendoes, as she knew I was your friend, to let me know the state of affairs.” “Lady Grayson?” “The same.” “The Jezebel!” “And worse, lad. But, Armstrong, my lad—I have come then too late?” Pride and resentment kept Dale silent for a few moments, and then he said huskily— “It is false.” “But it is the talk of London, my lad, and it means when it comes to Dellatoria’s ears—Bah! a miserable organ-grinder by rights—endless trouble. Perhaps a challenge. Brutes who
- 57. have no rightto name the word honour yell most about their own, as they call it.” “It is not true—or—there, I tell you it is not true.” “Not true?” For answer Armstrong walked to the side of the studio, took a large canvas from where it stood face to the wall, and turned it to show the Contessa’s face half painted. “Good,” said Pacey involuntarily, “but—” “Don’t ask me any more, Joe,” said Dale. “Be satisfied that history is not going to repeat itself. I have declined to go on with the commission.” “Armstrong, lad,” cried Pacey, springing from his seat, and clapping his hands on the young man’s shoulders to look him intently in the eyes. “Bah!” he literally roared, “and I spoiled my night’s rest, and—Here: got any whisky, old man? ’Bacco? Oh, here we are;” and he dragged a large black briar-root, well burned, from his breast and began to fill it. Then, taking a common box of matches from his pocket—a box he had bought an hour before from a beggar in the street, he threw himself back in the big chair, lifted one leg, and gave the match a sharp rub on his trousers, lit up, sending forth volumes of cloud, and in an entirely different tone of voice, said quite blusteringly— “Now then, about that goddess canvas; let’s have a smell at it. Hah! yes, you want a Juno—a living, breathing divinity, all beauty, scorn, passion, hatred. No, my lad, there are plenty of flesh subjects who would do as well as one of Titian’s, and you could beat an Etty into fits; but there isn’t a model in London who could sit for the divine face you
- 58. want. Your onlychance is to evolve it from your mind as you paint another head.” “Yes; perhaps you are right,” said Dale dreamily. “Sure I am. There, go in and win, my lad. You’ll do it.—Hah! that’s good whisky.—My dear old fellow, I might have known. I ought to have trusted you.” “Don’t say any more about it.” “But I must, to ease my mind. I ought to have known that my young Samson would not yield to any Delilah, and be shorn of his manly locks.—Yes, that’s capital whisky. I haven’t had a drop since yesterday afternoon. A toast: ‘Confound the wrong woman.’ Hang them,” he continued after a long draught, “they’re always coming to you with rosy apples in their hands or cheeks, and saying, ‘Have a bite,’ You don’t want to paint portraits. You can paint angels from clay to bring you cash and fame. Aha, my goddess of beauty and brightness, I salute thee, Bella Donna, in Hippocrene!” “Oh, do adone, Mr Pacey,” said the lady addressed to wit, Keren-Happuch. “I never do know what you mean, I declare,”—(sniff)—“I wouldn’t come into the studio when you’re here if I wasn’t obliged. Please, Mr Dale, sir, here’s that French Mossoo gentleman. He says, his compliments, and are you too busy to see him?” “No, Hebe the fair, he is not,” cried Pacey. “Tell him there is a symposium on the way, and he is to ascend.” “A which, sir? Sym—sym—” “Sym—whisky, Bella Donna.”
- 59. The girl glancedat Dale, who nodded his head, and she hurried out. The door opened the next minute to admit a slight little man, most carefully dressed, and whose keen, refined features, essentially French, were full of animation. “Ah, you smoke, and are at rest,” he said. “Then I am welcome. Dear boys, both of you. And the picture?” He stood, cigarette in teeth, gazing at the large canvas for a few moments. “Excellent! So good!” he cried. “Ah, Dale, my friend, you would be great, but you do so paint backwards.” “Eh?” cried Pacey. “I mean, my faith, he was much more in advance a month ago. There was a goddess here. Where is she now?” “Behind the clouds,” said Pacey, forming one of a goodly size; and the others helped in a more modest way, as an animated conversation ensued upon art, Pacey giving his opinions loudly, and with the decision of a judge, while the young Frenchman listened to his criticism, much of it being directed at a flower-painting he had in progress. The debate was at its height, when the little maid again appeared with a note in her hand. “Aha!” cried Pacey, who was in the highest spirits—“maid of honour to the duchess—the flower of her sex again. Hah! how sweet the perfume of her presence wafted to my sense of smell.” “Oh, do adone, please, Mr Pacey, sir. You’re always making game of me. I’ll tell missus you call her the duchess—see if I don’t. It ain’t me as smells: it’s this here letter, quite
- 60. strong. Please, MrDale, sir, it was left by that lady in her carriage.” “Keren-Happuch!” came from below stairs as the girl handed Dale the note; and his countenance changed as he involuntarily turned his eyes to his friend. “Keren-Happuch!” came again. “Comin’, mum,” shouted the girl, thrusting her head for a moment through the ajar door, and turning back again. “Said there wasn’t no answer, sir.” “Keren-Happuch!” “A call from the Duchess of Fitzroy Square,” said Pacey merrily. “No, sir, it was that Hightalian lady, her as is painted there,” said the girl innocently, and pointing to the canvas leaning against the wall, as she ran out. “Confound her!” roared Pacey, springing to his feet, and turning upon his friend, with his eyes flashing beneath his shaggy brows; “is there no such thing as truth in this cursed world?” “What do you mean?” cried Dale hotly, as he crushed the scented note in his hand. “Samson and Delilah,” said Pacey, with savage mockery in his tones. “Here, Leronde, lad,” he continued, taking up his glass, “a toast for you—Vive la gallantry. Bah!” He lifted the glass high above his head, but did not drink. He gave Armstrong a fierce, contemptuous look, and
- 61. dashed the glassinto the grate, where it was shivered to atoms.
- 62. Chapter Seven. The ScentedNote. Leronde stood for a moment watching his friends excitedly; and then, as Pacey moved towards the door, he sprang before it. “No, no!” he cried; “you two shall not quarrel. I will not see it. You, my two artist friends who took pity on me when I fly —I, a communard—for my life from Paris. You, Pacie, who say I am brother of the crayon, and help me to sell to the dealaire; you, Dale, dear friend, who say, ‘Come, ole boy, and here is papaire and tobacco for cigarette,’ and at times the dinner and the bock of bière, and sometimes wine—you shake hands, both of you. I, Alexis Leronde, say you muss.” “Silence!” roared Pacey. “Whoever heard of good coming of French mediation?” “Be quiet, Leronde,” cried Armstrong firmly. “Joe, old fellow, let me—a word—explain.” “Explain?” growled Pacey, as the young Parisian shrugged his shoulders and stood aside to begin rolling up a cigarette with his thin deft fingers. “Stop, Joe!” cried Armstrong, “you shall not go. The letter is some request about the picture—for another artist to finish it. Here, read it, and satisfy yourself.” He tore open the scented missive, glanced at it, and was about to hand it over to his friend; but a few words caught his eye, and he crushed the paper in his hand, to stand flushed and frowning before his friend.
- 63. “All right: Isee,” said the latter, with a bitter, contemptuous laugh. “We’re a paltry, weak lot, we men. Poor little daughter of the stars and stripes across the herring-pond! I’m sorry, for I did think I could believe your word.” “Dear boys—ole men!” cried Leronde, advancing once more to play mediator. “Shut up!” roared Pacey, so fiercely that the young Frenchman frowned, folded his arms across his chest, and puffed out a cloud of smoke in defiance. “Joe, I swear—” “Thank you,” said Pacey ironically. “I can do enough of that as I go home;” and, swinging open the door, he strode out and went downstairs, whistling loudly the last popular music-hall air. “Aha! he flies,” cried Leronde, biting through his cigarette, the lighted end falling to the floor, while he ground up the other between his teeth. “I go down. He insult me—he insult you, my dear friend. I pull his nose on ze door mat, and say damn.” “Be quiet, lad!” cried Armstrong fiercely. “It is nothing to do with you. It is my affair.” “Yes, I understand, dear ole man,” said Leronde, placing his fingers to his lips, and nodding his head a great deal, while Armstrong stood dreamy and thoughtful, frowning, as if undecided what to do. “I know I am French—man of the whole world, my friend. I love the big Pacie. So good, so noble, but he is not young and handsome. The lady, she prefaire my other good friend. What marvel? And the good Pacie is jealous.”
- 64. “No, no; youdo not understand.” “But, yes. Cherchez la femme! It is so always. They make all the mischief in the great world, but we love them always the same.” “I tell you that you do not understand,” cried Armstrong angrily. “Well, no; but enough, my friend. Ah, there is so much in a lettaire that is perfumed. I do not like it; you two are such good friends—my best friends; you, the American, he, the big honest Jean Bull. I do not like you to fight, but there, what is it?—a meeting for the honour in Hyde Park, a few minutes wiz the small sword, a scratch, and then you embrace, and we go to the déjeûner better friends than before. You are silent. I will make another cigarette.” “I was thinking,” said Dale slowly. “What—you fear to ask me to be your second? Be of good courage, my friend. I will bear your cartel of defiance, and ask him who is his friend.” “Bah!” ejaculated Dale, so roughly that Leronde frowned. “There, don’t take any notice of me, old fellow,” he cried. “Sit down and smoke. You will excuse me.” Leronde bowed, and Armstrong hurried into his inner room, where he smoothed out the note, and read half aloud and in a disconnected way:— “How can you stay away—those long weary weeks—my unhappy state—force me to write humbly—appealingly—my wretched thoughts—Lady Grayson—her double looks of triumph over me—will not believe it of you—could not be so base for such a heartless woman as that—heartbroken—my
- 65. first and onlylove—won from me my shameless avowal— not shameless—a love as true as ever given—for you so good and noble. In despair—no rest but in the grave— forgive your coldness. Come back to me or I shall die—die now when hope, love, and joy are before me. You must— you shall—I pray by all that is true and manly in your nature—or in my mad recklessness and despair I shall cast consequences to the winds and come to you.” Dale crushed up the letter once again, and as he stood frowning and thoughtful, he struck a match, lit the paper, and held it in his hand till it had completely burned out, scorching his hand the while. Then, going to the window, he blew the tinder out and saw it fall. “The ashes of a dead love,” he muttered; and then quickly, “No, it was not love. The mad fancy of the moment. There, it is all over. Poor woman! if all she says is honest truth, she must fight it down, and forgive me if I have been to blame. Yes; some day I can tell her. She will not forgive me, for there is nothing to forgive. Poor little woman! Ah, if the one who loves us could see and know all—the life, the thoughts of the wisest and best man who ever breathed! Nature, you are a hard mistress. Well, that is over; but poor old Joe! He will find out the truth, though, and ask my pardon. Everything comes to the man who waits.” He crossed to a desk lying on a table by his bed, opened it, took out a photograph, and gazed at it for a few moments before replacing it with a sigh. “You can be at rest, little one. Surely I am strong enough to keep my word.” Then he started and bit his lip, for a hot flush came to his temples as the last words in the letter he had burned rose
- 66. before him: “castconsequences to the winds and come to you.” He shivered at the idea, as for the moment he saw the beautiful, passionate woman standing before him with her pleading eyes and outstretched hands. “No!” he cried aloud, “she would not go to the man who treats her with silence and—” “Did you call me, mon ami?” said a voice at the door. “No, old fellow; I’m coming,” cried Dale; and then to himself, as one who has mastered self. “That is all past and gone—in ashes to the winds. Now for work.”
- 67. Chapter Eight. In theScales. “Nothing like hard work. I’ve conquered,” said Dale to himself one morning, as he sat toiling away at his big picture, whose minor portions were standing out definitely round the principal figure, which had been painted in again and again, but always to be cleaned off in disgust, and was now merely sketched in charcoal. He was waiting patiently for the model who was to attend to stand for that figure—the figure only—for Pacey’s idea had taken hold, and, though he could not dwell upon it without a nervous feeling of dread, and asking himself whether it was not dangerous ground to take, he had determined, as he thought, to prove his strength, to endeavour to idealise the Contessa’s features for his Juno. It was the very countenance he wished to produce, and if he could have caught her expression and fixed it upon canvas that day when the Conte entered, so evidently by preconcerted arrangement with Lady Grayson, the picture would have been perfect. “It need not be like her,” he argued; “it is the expression I want.” He knew that in very few hours he could produce that face with its scornful eyes, but he always put it off. After a time, when the trouble there was not so fresh, it would be more easy—“and the power to paint it as I saw it then have grown faint,” he added in despair, with the consequence that between the desire to paint a masterpiece, and the temptation to which he had been
- 68. exposed, the faceof Lady Dellatoria was always before him, sleeping and waking; though had he made a strong effort to cast out the recollection of those passionate, yearning eyes, the letters he received from time to time would have kept the memory fresh. “At last!” he cried that morning, as steps were heard upon the stairs. “But she has not a light foot. I remember, though: they told me that she was a fine, majestic-looking woman.” There was a tap at the door. “Come in.” Jupiter himself, in the person of Daniel Jaggs, thrust in his noble head. “All right, Emperor, come in,” said Dale, going on painting, giving touches to the background of his Olympian scene, with its group of glowing beauties, who were to be surpassed by the majesty of the principal figure still to come. “What is it? Don’t want you to-day.” “No, sir. I knowed it was a lady day, but I’ve come with a message from one.” “Not from Lady—” He ceased speaking, and his heart beat heavily. Jaggs had been to and from Portland Place with the canvas. Had she made him her messenger? “Yes, sir; from Lady Somers Town.” “What?” cried Dale, with a sigh of relief, though, to his agony, he felt that he longed to hear from the Contessa
- 69. again. “Lady Somers Town,sir; that’s what Mr Pacey used to call her. Miss Vere Montesquieu of the Kaiserinn.” “Miss Vere Montesquieu!” said Dale contemptuously. “Well, that’s what she calls herself, sir. Did you say what was her real name, sir?” “No, I didn’t, but I thought it. Oh, by the way, Jaggs, I must have another sitting or two from you. We haven’t quite caught the expression of Jupiter’s lips.” “No, sir, we haven’t, sir,” said the model, looking at the canvas wistfully. “I know azactly what you want, but it’s so hard to put it on.” “It is, Jaggs.” “You want him to be looking as he would if he was afraid of his missus, and she’d just found him out at one of his games.” “That’s it.” “Well, sir, I’ll try again. Perhaps I can manage it next time. I was a bit on the other night, and I did get it pretty warm when I went home. I’ll try and feel like I did then, next time I’m a settin’.” “Yes, do,” said Dale, who kept on with his work. “Ah, that’s better. Well, you were going to say something. Is anything wrong?” “Well, sir, I’m only a poor model, and it ain’t for me to presoom.”
- 70. “Lookers-on see mostof the game, Jaggs. What is it?” “Well, sir, I was looking at Jupiter’s corpus.” “Eh? See something out of drawing?” “No, sir; your nattomy’s all right, of course. Never see it wrong. You’re splendid on ’ticulation, muskle, and flesh. But that’s Sam Spraggs as sat for the body, wasn’t it?” “Yes; I’ve fitted it to your head.” “Well, sir, not to presoom, do you feel sure as it wouldn’t be more god-like, more Jupitery as you may say, if you let me set, painted that out, and give the head the proper body. Be more nat’ral like, wouldn’t it?” “No. What’s the matter with that?—the composition of a more muscular man with your head is, I think, excellent.” “But it ain’t nat’ral like, sir. You see, Sam’s too fat.” “Oh no, Jaggs. He only looks as if Hebe and Ganymede had poured him out good potions of a prime vintage, and as if the honey of Hybla often melted in his mouth.” “Well, sir, you knows best. Maria Budd says—” “Who?” “Miss Montesquieu, sir. She’s old Budd’s—the Somers Town greengrocer’s—gal.” “Humph! Idiot! Well, what message has she sent? Not coming again?” “No, sir. She’s very sorry, sir; but she’s got an engagement to early dinner at Brighton to-day, and won’t only be back in
- 71. time to takeher place in the chorus to-night.” “Confound the woman! I shall never get the figure done. Do you know of any one else, Jaggs?” “No, sir; and I’m afraid that you won’t after all be satisfied with her.” “All, well, you needn’t wait. Seen Mr Pacey lately?” “Yes, sir. Looks very ill, he do. Good morning, sir.” “Good morning.” “Beg pardon, sir; but my missus—” “There, there, I don’t want to hear a long string of your inventions, Jaggs. How much do you want?” “Oh, thankye, sir. If you could manage to let me have five shillings on account.—Thankye, sir. You are a gentleman.” “The Emperor” departed, winking to himself as if he had something on his mind; and Dale threw down brushes and palette, sat back with his hands clasped behind his head, gazing at the blank place in his great canvas, till by slow degrees it was filled, and in all her majestic angry beauty Juno stood there, with her attendants shrinking and looking on, while she seemed to be flashing at her lord lightnings more terrible than those he held in his hand. The face, the wondrous figure, in all its glow of mature womanhood, were there; and then the eyes seemed to turn upon Dale a look of love and appeal to him to think upon her piteous state, vowed to love and honour such a man as that.
- 72. Armstrong shuddered andwrenched his eyes away, wondering at the power of his vivid imagination, which had conjured up before him the Contessa in all the pride of her womanly beauty; and strive how he might to think of her only in connection with his picture, as he felt that he could produce her exactly there, and make the group a triumph of his work, he knew that his thoughts were of another cast, and that, in spite of all, this woman had inspired him with a passion that enthralled his very soul. He started up, for the maid entered with a letter, and he fancied that she seemed to read his thoughts, as he took it and threw it carelessly on the table. He did not look at the address. There was the Conte’s florid crest, face upward, and it lay there ready to be burned as soon as he left his seat, for the matches were over the fireless grate. Keren-Happuch had reached the door. “’Tain’t scented up like some on ’em,” she said to herself; and then she turned to look wistfully at the artist, whose eyes were fixed upon vacancy, for he was reading the letter in imagination. He knew every word of sorrowful reproach it would contain, for the letters were little varied. She would tell him of her solitary state, beg him to reconsider his decision, and ask him whether, in spite of the world and its laws, it was not a man’s duty to take compassion upon the woman who loved him with all her heart. Yes: he could read it all. “Must get away,” he said to himself. “Why not go back home, and seek for safety behind the armour of her innocency? My poor darling, I want to be true to you, but I am sorely tempted now. It cannot be love; only a vile,
- 73. degrading passion fromwhich I must flee, for I am—Heaven knows, how weak.” “Ain’t yer well, sir?” said Keren-Happuch, in commiserating tones. He started, not knowing that the girl was there. “Well? Oh yes, Miranda, quite well.” “No, you ain’t, sir, I know; and it ain’t because you smokes too much, nor comes home all tipsy like some artisses does, for I never let you in when you wasn’t just what you are now, the nicest gent we ever had here.” “Why, you wicked little flatterer, what does this mean?” cried Dale merrily. “No, sir, and that won’t do,” said the girl. “I’m little, but I’m precious old, and I’ve seen and knows a deal. You ain’t well, sir!” “Nonsense, girl! I’m quite well. There, run away.” “No, sir, there ain’t no need; she’s out. There’s no one at home but me and puss. I can talk to you to-day without her knowing and shouting after me. She ’ates me talking to the lodgers.—I knows you ain’t well.” “What rubbish, my girl! I’m well enough.” “Oh no; you ain’t, sir. I don’t mean poorly, and wants physic, but ill with wherritin’, same as I feels sometimes when I gets it extry from missus. I know what’s the matter; you’ve got what Mr Branton had when he spent six months over his ’cademy picture as was lovely, and they sent it back. He said it was the blues. That’s what you’ve got,
- 74. because you can’tget on with yours, which is too lovely to be sent back. I know what a bother you’ve had to get a model for the middle there, and it worries you.” “Well, yes, Miranda, my girl, I’ll confess it does.” “I knowed it,” she cried, clapping her hands; “and just because you’re bothered, none of the gents don’t seem to come and see you now. Mr Leerondee ain’t been, and Mr Pacey don’t seem to come anigh you. Sometimes I feel glad, because he teases me so, and allus says things I don’t understand. But I don’t mind: I wish he’d come now and cheer you up.” “Oh, I shall be all right, Mirandy, my little lassie, as soon—” “Yes, that you will, sir, because you must get it done, you know. It is lovely.” “Think so?” said Dale, who felt amused by the poor, thin, smutty little object’s interest in his welfare. “Think so! Oh, there ain’t no thinking about it. I heard Mr Pacey tell Mr Leerondee that it was the best thing he ever see o’ yours. I do want you to get it done, sir. It seems such a pity for that big bit in the middle not to be painted.” “Yes, girl; but it must wait.” “Mr Dale, sir, you won’t think anything, will you?” “Eh? What about?” “’Cause of what I’m going to say, sir,” she said bashfully. “I do want you to get that picture well hung, sir, and make your fortune, and get to be a R.A.”
- 75. “Thank you. Whatwere you going to say?” “Only, sir, as I wouldn’t for any one else; no, not if it was for the Prince o’ Wales, or the Dook o’ Edinburgh hisself, but I would for you.” “I don’t understand you,” said Dale, wondering at the girl’s manner. “I meant, sir, as sooner—sooner—than you shouldn’t get that picture done and painted proper, I’d come and stand for that there figure myself.” Dale wanted to burst out laughing at the idea of the poor, ill-nurtured, grubby little creature becoming his model for the mature, graceful Juno; but there was so much genuine desire to help him, so much naïve innocency in the poor little drudge’s words, that he contained himself, and before he could think of how to refuse without hurting her feelings, there was a resonant double knock and ring at the front door. “Why, if it ain’t the postman again,” cried the girl. “He was here just now. I know: it’s one o’ them mail letters, as they calls ’em, from foreign abroad.” Keren-Happuch was right, for she came panting up directly with a thin paper envelope in her hand, branded “Boston, U.S.A.” “For you, sir,” she said; and she looked at him wistfully, as in an emotional way he snatched the letter from her hand and pressed it to his lips. “Salvation!” he muttered, as he turned away to go to the inner room. “God bless you, darling! You are with me once again. I never wanted you worse.”
- 76. “It’s from hissweetheart over acrost the seas,” said Keren- Happuch, as she spread her dirty apron on the balustrade, so as not to soil the mahogany with her hand as she leaned upon it to go down, sadly. “And he’s in love, too; that’s what’s the matter with him. Puss, puss, puss!” There was a soft mew, and a dirty-white cat trotted up to meet her, and leaped up to climb to her thin shoulders, and then rub its head affectionately against her head, to the disarrangement of her dirty cap. “Ah! don’t stick your claws through my thin clothes.—Yes,” she mused, “he’s in love. Wonder what people feel like who are in love, and whether anybody ’ll ever love me. Don’t suppose any one ever will: I’m such a poor-looking sort o’ thing. But it don’t matter. You like me, don’t you, puss? And them as is in love don’t seem to be very happy after all.”
- 77. Chapter Nine. The Model. ArmstrongDale did not hear the door close. Picture—the Contessa—everything was forgotten, and for the time he was back in Boston. For he had thrown himself into a chair, and torn open the envelope. But he could not rest like that. He wanted room, and he came back to begin striding about his studio, reading as he walked. But it did not seem to him like reading, for the words he scanned took life and light and tone as he grasped the pure, sweet, trusting words of the writer, breathing her intense love for the man to whom she had plighted her troth. And as in imagination he listened to the sweet breathings of her affection, and revelled in her homely prattle about those he knew, and her hopeful talk of the future, when he would have grown famous and returned home to the honours which would be showered upon him by his people—to the welcome for him in that one true throbbing heart, his own throbbed, too, heavily, and his eyes grew moist and dim. “God bless you, darling!” he cried passionately; “you have saved me when I was tottering on the brink and ready to fall. The touch of your dear hand has drawn me back when all was over, as I thought. I will keep faith with you, Cornel. Forgive me, love! Heaven help me; how could I be so mad!” There was a brightness directly after in his eyes, as he carefully bestowed the letter in his pocket-book and placed it in his breast. “And they say the day of miracles is past, and that there is no magic in the world,” he cried proudly. “Poor fools! they
- 78. don’t know. Liethere, little talisman. You are only a scrap of paper stained with ink, but you are a charm of the strongest magic. Bah! It was all a passing madness, and I have won. What a silly, weak, morbid state I was in,” he continued, as he stood in front of his picture, and snatched up palette and brushes. “Why, Cornel darling, you have burned up all the clouds with the bright sun of your dear love. And I can finish you now, my good old daub. Jupiter can easily have that hang-dog, cowardly, found-out look imported into his phiz. I feel as if I can see, and do it now. The nymphs are as good as anything I have done. I don’t always satisfy myself, but that background is jolly. I’ve got so much light and sunshine into it, such a dreamy, golden atmosphere effect, that it brightens the whole thing, and what a nuisance it is that old Turner ever lived! If he had never been born, my background would have been grand. As it is —well, it’s only an imitation. No, no; come, old fellow: say, a good bit of work by an honest student of old Turner’s style. Yes,” he continued, drawing back, “I think it will do. Even dear old Joe praised that; he said it wasn’t so bad. Poor old chap! I wish we were friends again. And as for my Juno, I think I can manage her. Montesquieu shall come— esquieu—askew—no, not askew; I’ll get her into a noble, dignified position somehow. I hope she has a good figure. While her face—why, Cornel, my darling, it shall be yours.” He paused to stand thoughtfully before the great canvas, drawn out upon its easel into the best light cast down from the sky panes above, and let his mahlstick rest upon the picture just above the blank, paint-stained portion left for the principal figure. “Queer way of working,” he said with a laugh, “finishing the surroundings before putting in the mainspring of my theme. That’s hardly fair, though, for I painted my Juno first—ah! how many times, and rubbed her out. Never mind; she
- 79. must come strongnow to stand out well in front of these figures. She must—she shall.” He stood there motionless for a few minutes; and then, quite eagerly— “Why not?” he said. “Too soft, sweet, and gentle-looking? Cornel, darling, it shall be an expiation of a fault, and some day in the future you shall stand before it and gaze in your own true face as I have painted you—made grand, crushing, majestic, full of scorn and contempt, as it would have been, had you stood face to face with me, awaking to the fact that I was utterly lost, unworthy of your love. I can—I will—paint that face, and that day, darling, when you turn to me with those questioning eyes, and tell me you could not have looked like this, you shall know the truth.” The inspiration was there, and with wonderful skill and rapidity he began to sketch in the face glowing before him in his imagination. No model could have given him the power to paint in so swiftly those lineaments, which began to live upon the canvas as the hours went on. For he was lost to everything but the task before him, and he grew flushed and excited as the noble frowning brow threatened, and then by a few deft touches those wonderful liquid eyes began to blaze with passionate scorn. The ruddy, beautifully curved lips were parted, revealing the glistening teeth; and at last, how long after he could not tell, he shrank away from the great canvas, to gaze at the features he had limned, trembling, awe-stricken, knowing that his work was masterly, but asking himself whether the painting was his, or some occult spiritual deed of which he had been the mere animal mechanism, worked by the powers of evil to blast him for ever.
- 80. His lips wereparched, his tongue and throat felt dry with the fever which burned within him, as he stood trying to gather the courage to seize a cloth and wipe out the face that gazed at him and made him shrink in his despair. He dragged his eyes from the canvas, and looked wildly round the great studio, where all was silent as the grave. The bright light had passed away; and he knew that it must be about sunset, for all was cold and grey, save the shadows in the corners of the room, and they were black. Everything was growing dim and misty, save the face upon his canvas, and that stood out with its scornful, fierce anger, though, through it all, so wonderful had been the inspiration beneath whose influence he had worked, there was an intense look of passionate love and forgiveness; the eyes, while scornfully condemning and upbraiding, seemed to say, “I love you still, for you are and always will be mine.” “Cornel!” he groaned. “Heaven help me! and I have fought so hard. Ah!” he cried, with a sigh of relief, for there were hurried footsteps on the stairs, and the fancied dimness of the studio seemed to pass away as little, meagre Keren- Happuch gave one sharp tap on the door, and then ran in, to stop short, looking wonderingly at the artist’s ghastly, troubled face. “Oh, Mr Dale, sir, you do work too hard,” she cried reproachfully. Then, in an eager whisper, “It’s all right, sir. The model’s come. I told her she was too late for to-day, but she said she’d see you all the same.” “Where is she?” said Armstrong, in a voice which startled him. “In the ’all, sir. I made her wait while I come to know if you’d see her. She’s got on a thick wail, but sech a figger,
- 81. sir. She’ll do.” “Sendher up,” said Dale, “but tell her I cannot be trifled with like this.” “Yes, sir. I’ll tell her you’re in a horful rage ’cause she didn’t come this morning.” Dale hardly heard the words, but turned away as the girl left the room, to stand gazing at the face which had so magically sprung from the end of his brush; and he still stood gazing dreamily at the canvas when the door was once more opened, there was the rustling of a dress, and Keren-Happuch’s voice was heard, saying snappishly— “There’s Mr Dale.” Then the door was shut, and muttering, “Stuck-up, orty minx,” the girl went down to her own region. Dale did not stir, but still stood gazing at the canvas, fascinated by his work. But his lips moved, and he spoke half-angrily, but in a weary voice. “I had given you up, Miss Montesquieu. I want you for this figure, but if you cannot keep faith with me—yes,” he said, as his visitor stepped toward him, drawing off her veil—“for this.” He turned sharply then, as if influenced in some unaccountable way, and started back in horror and despair. “Valentina!” “Armstrong!” came in a low, passionate moan, as she flung herself upon his breast—“at last, at last!”
- 82. The palette andbrushes dropped from his hands—he was but man—and she uttered a low sigh of content as his arms closed round her soft yielding form, and his lips joined hers in a long, passionate, clinging kiss. Then reason mastered once more, and he thrust her from him. “No, no,” he gasped; “for God’s sake, go! Why have you come?” “A cold welcome,” she said, smiling. “I come to beg that you will grant his prayer.” “I do not understand you.” “My husband wrote begging you to reconsider your determination, and come to finish my portrait.” “Impossible! He did not write.” She pointed to the unopened letter lying upon a table, with the florid crest plainly showing. “I had not opened it,” he said. “I thought—” “That it was from me. How cruel men can be! He asks you to come back.” “At your persuasion?” cried Dale fiercely. “Yes, at my persuasion, and you will come. You must—you shall.” She clung closer to him. “Armstrong,” she whispered, “I cannot live without you. You have drawn me to you; I could bear it no longer;” and she held to him once more in spite of his repellent hands.
- 83. “It is madness—yourhusband—your—your title—your fair fame as a woman.” “Empty words to me now,” she said in a low, thrilling whisper. “I could not stay. You are my world—everything to me now.” “Woman, I tell you again, this is madness—your husband?” “With Lady Grayson, I believe. What does it matter? I am here—with you. Armstrong, am I to go on my knees to you? I will—you have humbled me so. Why are you so cruel, when you love me too?” “I—love you—no!” She laughed softly as, in spite of his shrinking, her arms enfolded him once more, and her words came in a low sweet murmur to his ear. “Yes; you love me—as wildly and passionately as I love you. I knew it—I could feel it, though you would not answer my appeals. Look,” she whispered, “it is as I felt; you are always thinking of me. I am ever in your thoughts. But am I as beautiful as that? Yes: to you. But look from the picture to my eyes. They could not gaze so fiercely and scornfully as that. Now, tell me that you do not love me, and I was not in your thoughts.” She pointed to the features, glowing—almost speaking, from the canvas—her faithful portrait, full of the angry majesty he had sought to convey. Alas! poor Cornel. Not a lineament was hers. Armstrong groaned.
- 84. “Heaven help me!”he muttered. “Is it fate?” His hands repulsed her no longer, and he stood holding her at arm’s length, gazing into the eyes which fascinated, lost to everything but her influence over him, till with a hasty gesture, full of anger, she shrank away and sought her veil from the floor. “Some one!” she whispered fiercely, for there was a step upon the stair. “The Conte,” cried Dale, startled at the interruption. “Hide me, quick! That room,” cried the Contessa; and she took a step toward it as she veiled her face. “No,” she cried, turning proudly, and resisting an inclination to step behind the great canvas close to which she stood, “Let him see me. His faithlessness has divorced us, and given me to the man I love. You will protect me. Kill him if you wish. I am not afraid.” This in a hasty whisper as the steps came nearer, and Valentina’s eyes glistened through her veil as she saw the artist draw himself up, and take a step forward to meet the intruder. “Better that it should be so at once,” she whispered. “Let him come.” The door was thrown quickly open as she spoke.
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