Liability & Contracts

Background

It is vital to the Australian economy that competition in the consulting industry be based on recognition of the value of technical and commercial performance outcomes. However, many contracting behaviours that are evident across the building and construction industry are driving poor risk management behaviours and exposing all parties to the possibility of project failure and unforseen cost. The lack of standardisation of contractual terms across the public and private sector means that cost and time is lost in the parties repeated negioating the core terms. This can be resolved by the take up across the market of model terms and conditions that have been developed by consultant and client groups working together to achieve some balance and consistency

Consult Australia encourages all consulting engineering firms to adopt risk management processes designed to identify, treat and reduce the degree of liability arising from contractual agreements.

Policy Positions

Supporting the adoption of AS4122-2010

Consult Australia's Position Statement on Liability Management

Consult Australia's Position Statement on Professional Standards

Public Sector Contracting

Consult Australia Public Sector Contracting Paper - June 2008
This paper was developed by Consult Australia in 2006 then updated in 2008. It is intended to inform the Commonwealth Government’s review of contracting practices and influence the development of State, Territory and Local Governments’ policies. The issues set out in this paper reflect the experience of Consult Australia members in their dealing with the Commonwealth, States, Territories and Local Governments. It sets out Consult Australia's analysis of the problems, the need for change and, recommended solutions.
Consult Australia Engagement with Public Sector Client Groups
Consult Australia has a history of good engagement with major public sector clients regarding their contractual terms and conditions. A snapshot of discussions held can be found on the Liability and Contracts Roundtable webpage.
The public sector produces guidelines to its agencies on procurement and contracting practices, which are good reference documents when tendering for government projects and reviewing their terms and conditions. Here are some particularly useful links:

Commonwealth Procurement Guidelines: Note section 6.14, which references limiting a suppliers liability to the Commonwealth.

Professional Indemnity Insurance Guidelines: Published by the Australian Procurement and Construction Council (peak body for public sector procurers in Australia). The APCC has prepared these Guidelines to help government agencies to determine the level of Professional Indemnity Insurance that they require consultants to hold when tendering for government contracts.

South Australian Government Guidelines for the Limitation of Liability of Suppliers, Consutlants and Contractors (click here).

Victorian Government Ministerial Direction on Contractual Provisions for Public Construction: Guide and Direction No. 2 (note section 1 (a) and (b) in particular).
Consult Australia collaborates with a range of other professional service industries regarding the campaign for fair and balanced contractual conditions. Consult Australia in conjunction with the Liability Reform Steering Group has prepared a two page briefing on the benefits of streamlining and simplifying Commonwealth procurement contracts. A copy is available here.

Proportionate Liability Legislation and Professional Standards Legislation

Consult Australia supports the legislative reforms introduced through the Proportionate Liability and Professional Standards legislation, which have been introduced into every jurisdiction in Australia. These pieces of legislation allow consultants to limit their liabilities in return for improvements in standards of service delivery to clients and the community. Consult Australia does not support the inclusion of terms in contracts that require consultants to waive the safeguards contained in the these pieces of legislation that are designed to limit consultants’ liability.

Consult Australia Submission on National Consistency of Proportionate Liability Legislation

Consult Australia Submission to the Tasmanian Goverment on the Professional Standards Legislation

Professional Indemnity Insurance

Consult Australia was at the forefront of the implementation of national proportionate liability and professional standards reforms which are designed to improve the environment and encourage increased market competition for PI insurance in Australia. Consult Australia encourages firms to purchase PI insurance cover on the basis of best policy value and coverage and not price alone. Consult Australia continues to monitor trends in PI insurance costs, deductibles, policy coverage and exclusions and to use this information for discussions with insurers.

Consult Australia PI Pathway
Consult Australia's PI Pathway gives Consult Australia members access to the PI Market through a panel of experienced and highly professional brokers. The Pathway is also a way of accessing information and advice provided by the Broker Panel on a range of PI issues. Selection of the Panel of Brokers was based on on their expertise and commitment to assisting the engineering and consulting industry with their PI insurance needs. For more information on the PI Pathway please visit the website here.

Member Guidance

Consult Australia Practice Note 4.02: Guide to Contract Terms: Managing Unfavourable Terms .
Consult Australia developed this document with input and assistance from client organisations, consultants and insurers. It is intended as a guide for clients who need to draft contract conditions and consultants who sign them. Both parties need to fully understand the implications of including these conditions in their contracts.

Consult Australia Practice Note 2.04: Professional Engineers' Certificates
The purpose of this Practice Note is to provide some guidance on the potential risks associated with certifying the outcome of a consultant’s work.In some jurisdictions of Australia clients require that consultants provide such a certificate that they will seek to rely upon in the event of a dispute arising about the subject matter of the certificate.It is important that consultants understand their obligations in relation to the certificate and the liabilities that can be assumed before agreeing to sign.

Consult Australia Practice Note 2.02: Negligence and Duty of Care
This Practice Note outlines basic principles relating to the law of negligence and the duty of care owed to clients.

Consult Australia Practice 2.08: Climate Change and Green Building Liabilities
This Practice Note provides a review of some of the emerging risks associated with climate change and sustainability in the industry. It highlights the need to consider the potential liabilities that a consultant could attract and also the need to consider strategies to identify and manage them.

Consult AustraliaPractice Note 3.04: Risk Management Guidelines for Consulting Engineers

Consult Australia Liability and Contracts Roundtable

Click here to access the members area for Liability and Contracts, including access to the Liability and Contracts Roundtable. (If you require a user ID and password, please send an e-mail to info@consultaustralia.com.au).