Civil Engineering Reference
In-Depth Information
The question is best answered by first considering the nature of novation. Novation com-
monlyoccursintheconstructionindustrywhereacontractbetweenemployerandconsultant
is replaced by a contract between contractor and consultant on identical terms. It is usually
easier, although not quite accurate, to think of novation as removing one party to a contract
and replacing it with another, third, party. Thus, where an architect has been engaged by an
employer to carry out architectural services, it may be agreed that the employer will drop
out and the engagement will be taken over after tender stage by the successful contractor.
Novation requires an agreement between all three parties (in the situation just mentioned
that would be the employer, the architect and the contractor), but the main difficulties arise
because the contractor will not want the same terms as the employer in the contract with the
architect. Therefore, to be effective, the novation must make provision for a change in the
terms. The benefit of novation is supposed to be that the consultant is made liable for all the
design, even for early design carried out directly for the employer, and that this liability is
owed to the contractor. That may not necessarily be the case, as discussed earlier.
The system is supposed to promote a smooth design process by simply continuing with
the same design team involved. In the case of novation, the duty owed by the consultant to
the employer is wholly transferred to the contractor. The contractor takes on the employer's
duties to the consultant, and the consultant and the employer owe each other no further du-
ties. Therefore, the consultant has exactly the same design obligation, but it is owed to dif-
ferentpartiesatthetwostages.Moreover,therearedifferentobligationstoadviseduringthe
stages. The employer and sometimes the consultant may forget that the consultant owes no
advisorydutytotheemployerinthesecondstage.Ifthecontractorinstructstheconsultantto
change part of the design, the consultant has no option but to comply because the consultant
is now acting for the contractor, even if the consultant knows or believes that the employer
does not want that particular change. This is because the contractor has merely sub-let the
design to the consultant, and it is the contractor which has the direct design responsibility to
theemployer.Theconsultanthascontractedtocarryoutthecontractor'sinstructionsregard-
ing the design. These instructions may be that the consultant must complete the design in
accordance with the Employer's Requirements, but they may be simply that the consultant
will take the contractor's instructions. Anecdotal evidence suggests that consultants acting
first for the employer and then for the contractor encounter considerable difficulties in prac-
tice, and the best advice to consultants and employers is to avoid these situations and act for
one or the other party exclusively. However the arrangement is managed, the consultant is
always placed in a position of possible, and often actual, conflict.
