You’ve made one tiny mistake: Absolute obligations

I am constantly warning consultants against taking on absolute obligations, or indeed any obligation more onerous than to exercise the reasonable skill and care expected of their profession.

The point was well illustrated by a recent case in the Court of Appeal (Platform Funding vs Bank of Scotland). Here a firm of surveyors received standard instructions to value a property for the purpose of a loan. The surveyor carried out the survey, prepared a report in the usual way, and a loan was made, secured by a mortgage, on the property. The borrower then defaulted and the property was sold by the lenders for less than the sum they had advanced. The lenders sued the surveyor for the unrecovered balance.

The case against the surveyor was not that it had failed to carry out the valuation with reasonable skill and care or that it had been negligent in any other way. The simple fact was that the surveyor had surveyed the wrong property. It had been to the right street, but the houses were not numbered. It had got in touch with the borrower, who had directed it to and shown it around a house on the road, but unknown to the surveyor it was not the one that it had been instructed to survey. The one that it was supposed to be surveying was, in fact, only half built.

Whether or not the surveyor could be blamed for this situation is, for present purposes, beside the point, because no allegation was made that it had been negligent. The case was quite simple – the surveyor had undertaken to survey a particular property and had not done so; it was therefore in breach of contract. The question for the court was simply this: was the obligation to undertake the survey an absolute one? If it was, there would be no defence. Under English contractual law, if you undertake an unqualified obligation, that usually means that you have to perform it.

On this question – of whether the obligation was absolute – the Court of Appeal was divided. All three agreed that the valuation itself was required to be carried out in accordance with the obligation to exercise reasonable skill and care, that this was the normal obligation for a professional person and that clear words or circumstances would be necessary in order to conclude that there was a stricter obligation. However, the majority distinguished between the actual obligation to do the survey and the manner in which the survey was done, and held that the obligation to do the survey was an absolute obligation. The surveyor that failed to survey the right property was therefore liable. The third judge held that the obligation to exercise reasonable skill and care applied to everything that the surveyor did, which included locating the correct property.

The circumstances of this case were, of course, unusual, although similar situations have been before the courts. However, the general point that arises is that the professionals in question, by accepting (though probably without realising it) an absolute obligation, were thereby accepting a risk that nobody would think should fall on them, unless they had actually been negligent in failing to prevent that risk from eventuating.

The case against the surveyors was not that they had been negligent. the simple fact was that they had surveyed the wrong property

It is sometimes argued that, in a consultant’s contract of engagement, compliance with the brief from the client should be an absolute obligation, or at least stricter than the obligation to exercise reasonable skill and care. Under the standard terms and conditions published last year by one professional body, compliance with the brief is to be performed “insofar as is reasonably practicable”. The qualifying words would not have helped the surveyors in the case that I have described: it is hard to see that they could plausibly have argued that locating the correct property was not reasonably practicable.

For consultants, there is no good reason why compliance with the brief should not be subject to the normal standard of reasonable skill and care that applies, or should apply, to all their other obligations.

In some contracts, the brief may be set out in a long and complex document, stipulating the attainment of specific objectives. Clearly, no consultant should be held liable for failure to comply with such a brief, unless they fail to exercise reasonable skill and care.

Where, however, the brief is straightforward, the consultant would usually be negligent if it failed altogether to carry it out. In short, the client should have no concern about the normal standard of reasonable skill and care applying to the actual performance of the brief.

Where unusual circumstances arise, reasonable clients will accept that it is not the consultant that should be the victim of those circumstances.