Reliance letters in design and construction
Reports are often commissioned by parties involved in the design and construction of built assets that another party (other than the original client) then has to rely on to support or inform their own activities. Under such circumstances, the author of the report might issue a reliance letter, confirming that the third party can rely on the contents of the report, or can rely on a specific part of the report.
For example, an organisation selling a site might commission an assessment of geotechnical or environmental conditions that a purchaser later relies on when deciding whether to buy the site and at what price. Under these circumstances, the author of the report might issue a letter confirming that the purchaser can rely on the contents of the report.
Such a letter might include:
- A description of the report(s) to which the letter relates.
- The reason for the reliance.
- A warrant that the author exercised reasonable skill and care in preparing the report.
- Details of the original appointment agreement, perhaps limiting liability to that under the appointment (this requires that a copy of the appointment is provided).
- Other limitations to liability, such as a limiting period.
- A licence for use of the report.
- Confirmation of professional indemnity insurance.
- Consideration from the beneficiary to the consultant.
- A right to assign the benefit of the letter (for example to funders).
- Execution, perhaps as a deed.
This can be seen as a quicker and easier arrangement than providing a collateral warranty, or relying on the provisions of the Contracts (Rights of Third Parties) Act. However, it is important to ensure that the letter is carefully drafted and that the correct details are entered. Whether the result of a reliance letter is simply a common law duty to use reasonable skill and care, or whether it amounts to a contract between the parties that may introduce a greater duty will depend on the wording of the letter.
There are four essentials of a contract:
- Two or more parties; and
- An intention to create legal relations; and
- An agreement; and
- Consideration
The two essentials that might be disputed are an intention to create legal relations and consideration. This might be demonstrated by a consideration clause and by both parties executing the letter. However, even in the absence of such provisions, it may be apparent from the actions of the parties that the recipient of the letter has relied on it to their detriment, and this may be sufficient to establish ‘consideration’.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Specifying rendered external wall insulation for fire safety
How to interrogate the evidence provided to the specifier.
The benefits of writing articles for your organisation
How to create a profile for your organisation and publish for free.
No Falls Week. The importance of safe working at height
What to expect and what is on offer to avoid accidents.
Scottish Government action to reach net-zero targets
Retrofit expert group highlight critical actions needed.
A forward thinking, inclusive global community of members.
From engineered product life-spans, to their extension.
Circular economy in the built environment
A brief description from 2021. Where are we now?
Mental Health Awareness Week with ABS
Architects Benevolent Society programme of activity.
CLC publishes domestic retrofit competency framework
Roadmap of Skills for net zero.
May 13-19: Moving more for our mental health.
Understanding is key to conservation.
Open industry engagement survey seeks responses
Institutions and the importance of engagement.
National Retrofit Hub unveils new guide
Digital Building Logbooks and Retrofit: An Introduction.
Enhancing construction site reporting efficiency
Through digitisation and the digital revolution.
Comments