Just Adding the Simple Word "ALL": A Warning to Subcontractors

In the complex world of construction contracts, every word matters. As a subcontractor, you may be familiar with the phrase “reasonable skill and care”—a standard term that appears in countless agreements. However, what may seem like a minor addition of the word “ALL” can have far-reaching and severe consequences, potentially rendering your contractual obligations uninsurable and exposing you to significant financial risk.

Understanding the Implications of "ALL"

Let’s begin by dissecting the phrase “reasonable skill and care.” This term is generally understood to mean that a contractor or subcontractor is expected to perform their duties to a standard that is reasonably expected from a competent professional in the field. The standard does not demand perfection, but it does require that you perform your work in line with accepted industry practices.

Now, consider the impact of inserting the word “ALL” before “reasonable skill and care”:

• Original Clause: “The subcontractor shall exercise reasonable skill and care in performing the works.”
• Modified Clause: “The subcontractor shall exercise all reasonable skill and care in performing the works.”

The inclusion of “ALL” significantly alters the meaning of the clause. Rather than simply adhering to a standard of reasonable skill and care, you are now obligated to exercise every possible measure of skill and care that could be deemed reasonable. This could impose an almost impossible burden, opening you up to allegations of negligence for even minor oversights or deviations.

Case Law: A Cautionary Tale

The dangers of such broad contractual language have been highlighted in various UK legal cases. One notable example is Yorkshire Water Services Ltd v Taylor Woodrow Construction Northern Ltd [1998] CILL 1414. In this case, the court considered whether a contractor had met its obligations under a contract that required the exercise of “all reasonable skill and care.” The court concluded that this standard required the contractor to consider all potential risks and take all necessary steps to mitigate them. While the contractor was ultimately found to have met this standard, the case underscores the heightened scrutiny and potential for liability that comes with such an obligation.

Another illustrative case is Blyth & Blyth Ltd v Carillion Construction Ltd [2001] EWCA Civ 20, where the court examined the extent of a contractor's duty to exercise reasonable skill and care. Although the term “ALL” was not explicitly at issue, the case is instructive in showing how courts assess the standard of care. Had the word "ALL" been included in the contract, the contractor might have faced even greater difficulties in defending its position.

These cases highlight the potential pitfalls of agreeing to a clause that imposes an elevated standard of care. The inclusion of “ALL” could make it significantly easier for a party to argue that you have failed to meet your obligations, even if you have adhered to industry norms and best practices.

Uninsurable Obligations: A Risk You Can’t Afford

One of the most alarming implications of agreeing to a clause that includes “ALL” is that it may render your obligations uninsurable. Professional indemnity insurance is designed to cover claims arising from the failure to exercise “reasonable skill and care.” However, when the contractual obligation is to exercise “all reasonable skill and care,” insurers may argue that this creates an unattainable standard, thereby voiding coverage.

Insurance providers may view the expanded obligation as an open-ended and vague commitment that goes beyond the usual risk they are prepared to cover. Consequently, should a dispute arise, you could find yourself without the financial protection you assumed was in place, leaving your business vulnerable to potentially crippling claims.

Practical Advice: How to Protect Yourself

Given the serious risks associated with the word “ALL,” it is crucial to take a proactive approach to contract negotiation. Here’s what you can do:

1. Negotiate Contract Terms: Insist on the removal of the word “ALL” from clauses relating to reasonable skill and care. The clause should be revised to simply state that you will exercise “reasonable skill and care.” This phrasing is widely accepted in the industry and is likely to be covered by your professional indemnity insurance.
2. Seek Legal Advice: Before signing any contract, particularly one that includes potentially onerous terms, consult with a legal professional. An experienced construction lawyer can help you identify and amend problematic clauses, ensuring that your liabilities are manageable and insurable.
3. Review Insurance Coverage: Regularly review your insurance policies to ensure that they align with your contractual obligations. If your contract imposes a heightened standard of care, discuss this with your insurer to understand the potential impact on your coverage.
4. Document Everything: Maintain thorough records of your work processes, decisions, and any communications related to the performance of your duties. This documentation can be invaluable if a dispute arises, providing evidence that you have met the required standard of care.