A recent case has shown the hazards implicit in carrying out work for a friend without a formal contract in place.
It was all going so well.
Mrs Lejonvarn was helping out her friends and former neighbours, Mr and Mrs Burgess, with their garden landscaping project.
The Burgesses had been good to her and her husband, and Mrs Lejonvarn provided free professional services for the first phase of the project: the earthworks and hard landscaping, acting as architect and project manager.
Mrs Lejonvarn was not a UK-registered architect but had architectural qualifications, had worked in various architectural practices and had set up her own consultancy.
There was, as the court subsequently found, no contract for the services (not even an oral one), and there was no fee because Mrs Lejonvarn was intending to charge a fee for design work on the subsequent ‘soft’ phase of the project. But that never happened.
Duty of care?
There were disagreements and the Burgesses replaced Mrs Lejonvarn with a specialist landscape gardener to complete the project and sued Mrs Lejonvarn for the difference between the actual cost of the project, including remedial works, and what they had been told it would broadly cost.
As there was no contract, for the Burgesses to succeed with their claim Mrs Lejonvarn had first to owe them a duty of care in tort in respect of the services. The Technology and Construction Court said Mrs Lejonvarn, who had no professional indemnity insurance, did owe the Burgesses a duty of care. But what did the Court of Appeal think?
“The fact that services had been provided free did not make them merely informal or social; they were all provided on a professional footing”
Claims such as this, for pure economic loss, are a tricky topic. The worry is that finding a duty of care and giving a claimant a remedy in tort, where there is no contract and no physical injury, might open the door to innumerable potential claimants. It is for this reason that there are qualifying tests for a duty of care.
Like a contract
Where there is a relationship similar to a contract, the appropriate test – which the court applied in this case – asks whether there has been an assumption of responsibility by the service provider, reliance by the recipient of the service, and circumstances that make it appropriate to provide a legal remedy.
Mrs Lejonvarn had voluntarily provided skilled professional services in circumstances where she knew the Burgesses would rely on the proper performance of those services and it was fair, just and reasonable to find that there was a duty of care to exercise reasonable skill and care in providing professional services.
“Although there was no contract, the relationship was like a contract”
The fact that they had been provided free did not make them merely informal or social; they were all provided on a professional footing. The Court of Appeal agreed.
Although there was no contract, the relationship was like a contract. That did not mean that Mrs Lejonvarn had an obligation to provide her services for the project. Her duty in tort was to exercise reasonable skill and care in providing whatever professional services she did in fact provide.
All very interesting, you might say, but what does it all mean for construction?
Implications for construction
The first-instance judge described it as a cautionary tale, and so it is.
The wider message is that it could apply where someone with professional skills is doing a good turn for someone with whom they have a similar relationship, in legal terms, as Mrs Lejonvarn had with the Burgesses – where, perhaps, it might be a bit awkward to say no for fear of giving offence or upsetting a relationship.
This could include conducting a survey for a friend buying a house, preparing some design drawings for a relative, offering structural advice to a colleague on some DIY building works, or perhaps providing some free professional help offered to a current or prospective client with a view to future business.
The safe course is clearly to say no but if that is not a feasible option, and the work cannot be dealt with on a commercial contractual basis, there is always the option of a suitable disclaimer.
It is, of course, a shame to see good turns discouraged but better that than the risk of a very unhappy ending for all concerned.
James Morris is a senior associate and Jonathan Stone is a partner in the construction and engineering group at Mayer Brown International