Negligent Design Claims – Is it in the Contract?

Negligent Design Claims – Is it in the Contract?

By Rachelle K. Zidar, Esq.

Developers and project managers routinely rely on multiple professionals at the start-up of a particular project. Land is appraised, surveyed and inspected. Plans are engineered, drafted, and redrafted. Often, a design error by an engineer or similar professional is not evident until years after services have been rendered and in some instances, well after a project is complete. For example, a developer may rely on a surveyor to accurately describe a development’s boundaries, only to be challenged five years down the road with a trespass claim by a neighboring land owner. Assuming the survey was inaccurate and the developer has built upon his neighbor’s land, what remedy does the developer have?

It depends in large part upon whether the action is considered a breach of contract or a professional negligence claim. Ordinarily, claims for breach of contract may be brought within eight years of the breach but professional negligence actions must be brought within in four years of when the faulty services are rendered. Although some courts have extended this to permit additional time if the injured party had no reason to know or learn it was damaged, that is an uphill battle. This is particularly true if the operative documents simply impose a duty upon the professional to perform within industry standards. The longer, eight year statute of limitations applicable to breach of contract actions make it beneficial for a developer or project manager to have a detailed services contract with these types of professionals including indemnification and other provisions should they incur unforeseen costs or have to defend a lawsuit brought by a third party as a result of a faulty survey, design or inspection.