On 31 March 2023, the Office of Government Procurement (the OGP) introduced monetary caps on liability in the Standard Conditions of Engagement for Consultancy Services (Technical) and the Standard Conditions of Engagement for Archaeological Services (the Conditions). Monetary caps on liability have become a typical feature in consultant appointments in the private sector.
In addition, and of interest to those operating in the PRS sector, the OGP has also noted that it intends to introduce caps on liability into the standard forms of construction contract. This is something which they have indicated is to happen imminently. Caps on liability in construction contracts in Ireland, in either the public or private sector, are nowhere near as common as they are in consultant appointments. Such caps on liability in construction contracts are much more common in other EU jurisdictions.
If the OGP does introduce caps on liability for the public works contracts, it is to be expected that contractors will push much harder for similar caps when negotiating private sector contracts. Of course, if a contractor does negotiate a cap within the construction contract it would also expect such caps to apply to any claims that might be brought under collateral warranties; and the forms of collateral warranty currently in circulation would typically allow a contractor to rely on equivalent rights of defence when defending any claims brought under the warranty.
As such, if the market does move in the way that is anticipated, there will be a lot of focus on:
- the level of any caps on liability; and
- what types of loss ought to sit outside the cap.
Purchasers and funders of PRS units will have to consider the impact that such caps might have on their overall security package.
For further information in relation to this topic or any related matter, please contact Siobhan Kearney, Senior Associate, or Síomha Connolly, Solicitor, or your usual contact on A&L Goodbody’s Construction & Engineering Team.