Perfection Not Required: Beware Standard-of-Care Contract Clause Traps

The law does not require perfection!

Our company provides Contract Review services for its design professional clients.  Our review is from a risk management and insurance perspective.  Our role is to advise our clients so they can make the right decisions for their company.

One of the key issues in a contract is the “Standard of Care.”  Unfortunately, it is not uncommon to see a provision like this one:

Design Professional represents that its services will be performed in a manner consistent with the highest standards of care, diligence, and skill exercised by nationally recognized consulting firms for similar services.

The law does not require you to be perfect, but this one-sided client-drafted provision does! The “Highest” standards have yet to be achieved; how can your client expect you to perform to them?

Agreeing to perform to the “highest standards” is not only unfair, it is uninsurable.  It opens you up to liability for breach of contract even though you were not negligent.  Your Professional Liability policy is triggered by your negligence.

The most commonly applied definition of the standard of care for engineers can be found in the owner/engineer contract EJCDC E-500:

Standard of Care: the standard of care for all professional engineering and related services performed or furnished by Engineer under this Agreement will be the care and skill ordinarily used by members of the subject profession practicing under similar circumstances at the same time and in the same locality. Engineer makes no warranties, express or implied, under this Agreement or otherwise, in connection with Engineer’s services.

It is critical to avoid setting the performance bar higher than that which the law requires. Make sure any standard of care provisions are reasonable and that your contracts don’t contain any express or implied warranties that require you to performance beyond that same standard.