Contracts

Negotiate clear and fair agreements

A good contract that is fair to all parties can minimize the risk that an engineer faces during the course of a project. On the other hand, a poorly worded contract can greatly increase that risk. Review each contract or obtain legal aid to detect and delete or modify risk-enhancing language. A good approach is to use contracts that have been prepared by organizations representing designers, such as the CASE contracts, as a starting point for negotiations.

Always be sure that the terms of the contract are insurable under the firm’s professional liability insurance. For example, most insurance policies do not provide for the defense of an indemnitee, even though that term is often found in indemnity agreements. A good contract will recognize that professional services are being provided -- not a product -- and therefore perfection cannot be warranted by the service provider. The principle that risk should be fairly proportioned to the parties based on the benefit that each party is receiving is what forms the basis for a good contract. On that basis, the engineer should be held responsible for his own negligent errors or omissions, but not for the errors of other parties.