Copthorne Hotel (Newcastle) Ltd v Arup Associates

(1997) 85 BLR 22

Building contract - JCT Standard Form of Management Contract - construction of - management contractor's liability to employer for breach of management contract- management contractor's liability for breach of works contract - whether the contract excluded liability for the management contractor's own breach of the management contract - whether the contract excluded or limited the management contractor's liability when the works contractor breached the works contract

One of the considerations relating to the management contracting method is that the risk of the cost and the programme predominantly lies with the employer. The risk of additional cost resulting from default by a works contractor can also lie with the employer. In Copthorne Hotel (Newcastle) Ltd v Arup Associates [1997] 85 BLR 22, it was clarified to what extent a management contractor is liable for breaches by its works contractors.

This case concerned the 1987 edition of the JCT (Joint Contracts Tribunal) Standard Form of Management Contract and analysed the two categories of liability of a management contractor to an employer. The first results from a breach by a works contractor and the second from a breach of one of the management contractor's own obligations, such as supervision.

With the first category, the amount the employer can recover from the management contractor is limited to that which the management contractor can recover from the works contractor. However, for the second category, the judge in this case decided that the management contractor remained liable to the employer.

This case highlights the importance of the management contractor's duty to supervise under the Standard Form of Management Contract. Where damage is caused by a breach of this duty, the management contractor has no protection.

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Copthorne Hotel (Newcastle) Ltd v Arup Associates

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