Cases - Pacific Associates Inc v Baxter

Record details

Name

Pacific Associates Inc v Baxter

Date

[1990]

Citation

1 QB 993

Keywords

Contract administration

Summary

The plaintiffs were contractors carrying out dredging and reclamation work to a lagoon in the Persian Gulf. The plaintiffs' contract with the employer provided for the defendants, who were engineers, to carry out pre-contract reports on the ground conditions, to supervise the plaintiffs' work and to administer the payment provisions of the contract.

The plaintiffs issued a writ against the defendants for damages for economic loss, claiming that, by their failure to certify sums sought by the plaintiffs and by their rejection of the plaintiffs' claim against the employer, the defendants had been negligent or breached their obligation to act fairly and impartially in administering the contract.

The court held that that although the defendants were professional engineers, employed to supervise the plaintiffs' work, they were acting solely for the employer in doing so and were not under the terms of the contract or otherwise obliged to exercise due care to the plaintiffs. They had not voluntarily accepted any further duty to the plaintiffs and so did not owe a duty to avoid causing economic loss to the plaintiffs.

In the absence of a voluntary assumption of responsibility by the defendants to the plaintiffs, the contractual chain of liability (and especially the inclusion of a clause in the main contract disclaiming any liability owed by the defendants to the plaintiffs) was incompatible with the finding of a duty of care in tort.

This appears to overturn earlier authority which implied that such a duty might be owed (e.g. Michael Saliss v Calil (1987)).