How it may affect the profession. Part 3
Parts 1 and 2 of this series were previously published in the May and July issues of STRUCTURE. Part 1
provided a general overview of how climate change could impact an engineer’s services; Part 2 looked at the engineer’s professional standard of care. This final article looks at contractual provisions that could help to protect engineers against allegations that they failed to address climate change in their designs.
While the provisions listed below are generally appropriate for any design agreement, they can be of significant value with respect to an engineer’s liability for alleged failure to adapt its designs for climate change:
- Limitation of Liability
- Waiver of Consequential Damages
- Reliance on Owner-Provided Information or Service
- Owner’s Obligation to Analyze Possible Changes
- Owner’s Assumption of the Risk
Limitation of Liability
Limitation of liability is often a difficult negotiation (and could be the subject of an entire article by itself). If an owner will not agree to an appropriate limitation of liability for potential claims due to climate change or qualifies the limitation of liability with significant carve-outs (i.e., the limitation does not apply to claims covered by insurance or does not cover claims against the owner by third parties), the engineer should consider proposing a specific limitation on climate-related claims such as the following:
Engineer’s liability to Owner and anyone claiming through Owner for costs, losses, or damages resulting from changes in the environment or site that are not identified at the time of the design as design parameters shall be limited to the amount of Engineer’s Fee. Engineer’s liability will be based on actual damages to the extent caused by Engineer’s failure to design to existing and applicable codes.
Waiver of Consequential Damages
Consequential damages are economic damages such as lost rent; they are typically due to a delay in completion or inability to use the project as planned. Ideally, the Owner will agree to a complete waiver of consequential damages. If the Owner does not agree to a complete waiver, the engineer should propose a waiver of consequential damages arising from climate-related events:
Owner waives all consequential damages caused by climatic conditions that are not identified in the contract or existing codes and standards as needing to be addressed by the Engineer. Consequential damages include but are not limited to loss of use, income, profit, financing, business, or reputation.
Reliance on Owner-Provided Information or Services
All design agreements should contain a provision that explicitly states that the engineer is entitled to rely on information provided by the owner, with language such as that found in AIA B101, Standard Form of Agreement Between Owner and Architect:
§ 3.1.2 … The Architect shall be entitled to rely on, and shall not be responsible for, the accuracy, completeness, and timeliness of services and information furnished by the Owner and the Owner’s consultants.
This can help defend against a claim that climate change issues should have been addressed in the design. Other standard wording that is often used includes:
Engineer shall not be liable for claims arising from errors or omissions in the services and information furnished by Owner and Owner’s consultants except to the extent Engineer knew or should have known of such errors or omissions.
The engineer might want to expand on this with a contract provision that explicitly states that the owner is responsible for analyzing the potential effects of climate change.
Engineer shall be entitled to reasonably rely on, and shall not be responsible for, the accuracy or completeness of services and information furnished by Owner and Owner’s consultants. The Owner acknowledges and agrees that Engineer cannot anticipate the potential effects of climate change on the Project’s site or environment unless Owner has had these effects analyzed by Owner’s own consultant and contractually requires that these effects be considered during the design stage of the Project.
Alternatively, the engineer may require that the contract specifically disclaim its responsibility for climate adaptation:
Engineer will exercise engineering judgment consistent with generally accepted scientific, industry, and governmental information concerning environmental, atmospheric, and geotechnical conditions and developments to provide a work product that complies with applicable regulations and codes in accordance with the professional standard of care. However, Engineer expressly disclaims any obligation to design for the effects of climate change. The Owner assumes the risk of any damages or injury due to climate change, even if such damages or injury are foreseeable.
Can an Owner Stipulate that the Design Not Anticipate Risks Due to Climate Change?
Costs are a concern on virtually every project, and resistance to designing for climate change is likely to arise because of the additional costs for both investigation and design. Provided the design complies with applicable codes and current design practices, the engineer would probably not be liable to the owner if the design agreement explicitly stated that the owner does not want the engineer to address the effects of climate change and agrees to indemnify the engineer against any claims.
However, unless the owner also agrees to indemnify the engineer against third-party claims, the engineer could still face liability. Sample language for indemnification against third-party claims is:
Owner agrees to indemnify, defend, and hold harmless Engineer and its sub-consultants against any third-party claims alleging harm by Engineers or any sub-consultant’s failure to design for climatic events or conditions not addressed by existing codes and standards.
Conclusion
Engineers should review their contracts with an appropriately qualified legal professional to ensure that their contractual obligations are correctly stated. In addition, while these articles have focused on the claims and liability risks that could arise from an engineer’s failure to adapt to climate change, reputational risks and strategic risks are also a consideration. Whether or not an engineer is ultimately found liable for a claim, involvement in a project that did not meet the owner’s expectations or resulted in alleged damages to third parties (however slight) can damage the engineer’s reputation. Likewise, an engineer who cannot demonstrate a clear understanding of climate adaptation options is likely to lose out on business opportunities.■