A Contractor’s Duty to Warn of Design Defects

Design obligations do not necessarily spring to a contractor’s mind when engaged in a build-only contract. However, the trend of legal decisions in Australia and overseas indicates that these are issues contractors should be aware of.

Build-only construction contracts, such as AS4000, do not impose design responsibility on contractors and the principal retains control over the design of a project. Due to this risk allocation, contractors often attach minimal significance to design issues and any responsibility for design that may arise under a buildonly contract.

Despite this, a failure by a contractor to properly consider design issues, even in a build-only contracting scenario, can have significant legal ramifications. Although there is limited Australian case law on point, the trend of Australian courts and their overseas counterparts is to impose on contractors a duty to warn of design defects in certain circumstances.