Duties Of Professionals To Arrange Signing Of Contract Documents

The duty of a professional person appointed, amongst other things, to "prepare contract documentation and arrange for such documents to be executed by the parties" was considered by the English courts in Sweett (UK) Limited v Michael Wight Homes Limited in February 2012.

The facts

Sweett (UK) Limited ("Sweett") were the QS and Employer's Agent on a project for circa £1m, for the demolition of an existing factory building, construction of six houses and refurbishment of a cottage. The contractor was Diamond Property Construction Limited ("Diamond") and the employer was Michael Wight Homes Limited ("Wight").

Diamond started work in March 2008 on the basis of a letter of intent. The building contract was subsequently signed in May 2008. Sweett had given advice to Wight on the need for a bond, and it was a requirement of the contract that Diamond provide a performance bond, in the terms of the draft which was incorporated in the contract, for 10% of the contract sum.

Both before and after signing of the contract, Sweett was in touch with Diamond on numerous occasions in relation to the bond, and chasing for the bond to be issued. Communications included emails, meetings and telephone calls. These attempts continued until September 2008 when Sweett's engagement ended because of their fees having been unpaid since April. By that time, Diamond had still not produced a bond. They subsequently went into liquidation in June 2009.

The arguments

Wight argued that Sweett was responsible for ensuring that Diamond executed a performance bond, and that this was an absolute obligation. Diamond's failure to do so was a breach of contract.

Alternatively, they argued that it was an implied term of the contact that Sweett would use reasonable skill and care to arrange for the performance bond to be executed by Diamond. Sweet's failure to arrange for the execution was, Wight argued, a breach of that implied term. It was suggested there were measures available to Sweett, such as withholding payment from Diamond or advising Wight to meet the cost of the bond, which might have assisted but which Sweett did not take.

Sweett accepted there was an implied term of reasonable skill and care, but they also argued that they had met that standard. They also accepted that it was their duty to assist with compiling contract documents...