Article Loss Prevention

Duress or Commercial Reality?

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By Zita Mansi, BLM Solicitors

An AGS member queried whether he has any redress in circumstances where he is obliged to sign a contract with onerous terms in order to receive payment for work he has already carried out.  The onerous terms might include, for example, provision of a Limit of Indemnity of £5million where the fee is only £5,000, the risk of which had not been priced into the fee agreed for the work, or long payment periods of 60 or 90 days.

In such a situation, the member must choose between agreeing to the onerous terms or suing the client for its unpaid fees (which is often a commercially unattractive option).  The member queried whether this qualified as “duress”.

The necessary ingredients for a successful economic duress claim are:

  1. Pressure which is illegitimate;
  2. This pressure is a significant cause inducing the “victim” to enter into the contract; and
  3. The practical effect of the pressure is that there is compulsion on or a lack of practical choice for, the victim.

If the above ingredients are established then the victim of the duress is entitled to accept the term and later pursue a claim for undue influence in order render the contract void.

The courts have held, that “illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining.”  Cases where pressure has been considered “illegitimate” are those where the perpetrator has committed a crime, a tort or a breach of contract.

Establishing that the victim had no realistic practical alternative but to submit to the pressure is also a high hurdle to overcome. In the scenario described above, the AGS member could (a) refuse to commence work until satisfactory terms are agreed or (b) carry out the work and then sue the client for payment if reasonable terms cannot be agreed.  Although these options are commercially undesirable, they are practical options nevertheless

Ideally, no AGS member would carry out any significant work unless and until satisfactory contract terms had been agreed in writing.  However, there are many reasons why this may not happen in practice.  For example, the works may be required urgently so that only the most basic terms, such as the scope of works, price and timescale, are discussed verbally beforehand.  AGS members would do well to have a set of their own standard terms and conditions that can be quickly adapted and sent to their clients before commencing work, for use in such situations.

Members can also refer their clients to the AGS Client Guide on Limitation of Liability Clauses, and Professional Indemnity Insurance which may assist their negotiations.

Report Loss Prevention

Loss Prevention Working Group Report

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Hugh Mallett, Chairman LPWG writes:

The group is drafting articles and guidance on a number of issues that are important to AGS members, see below for the list of our ongoing work programme and soon to be available guidance.


The LPWG met once since the November Committee meeting – 22nd Jan 2015. No calls have been made to the Legal or Chemical Helplines since the last LPWG meeting.

A Griffiths & Armour publication on claims “Professional Indemnity Insurance: Lessons to be learnt” is to be made available to AGS members via the new website

LPWG generally agrees with putting some documents behind a paywall on the new AGS website. There is also support for a knowledge hub (e-learning) that could be considered as a future initiative for students.

Loss Prevention Alerts (LPAs) are still in high demand for downloading [20 LPAs downloaded >100 times between Oct and Jan].

New member has joined the  group, Nora Fung – Arup legal.

Recently Published


  1. Elvanite Vs Amec- Limitations of Liability
  2. BGS – Deposition of Data


LPA 58 – Risks associated with as built drawings.
LPA 59 – The Consequences of Damage to Underground Services LPA 60 – What is meant by Supervision?

Work in Progress

  • LPAs
  • Summaries for the web site being reviewed and edited for accuracy.
  • Permission is being sought for publication of LPA 09 [Mott MacDonald case] online.
  • Contractors seeking contractual indemnities from their Sub Contractors. Ready for publication

Net Contribution Clauses: Newsletter article prepared. Authorisation to publish being sought from Griffiths & Armour.

Document on Ground Investigation Reporting (GIR/ GDR): Initial redraft prepared by J Strange – subject to further review/ comment. Now held to be consistent with revised BS5930.

Asbestos & deleterious materials: Newsletter article to be prepared [may also pick up discussion at Members Day]. Article on insurance cover re asbestos last published in 2011 to be re-published.

Collateral Warranties: Griffiths & Armour being approached to allow their Collateral Warranties – Basic Guide to be made available to AGS members. If permission is granted a short article highlighting its availability to be prepared for the Newsletter.

Expert Advisor and Expert Witness: Newsletter article being prepared. 1 of 2

Copyright Paper on copyright issues: drafted [advice to Members on copyright and on issues arising from use of reports and drawings in planning process].

PI Insurance for Contaminated Land: NEC3 contract requires insurance terms to be on an each and every claim basis. Aggregate cover only available for contaminated land (and asbestos and radioactivity). A newsletter article is being drafted.

Guide to report writing: Newsletter article drafted to advertise the guidance to AGS Members. The Guide itself was up-dated, but never published. Up-dated version to be retrieved, put on the web site and publicised in Newsletter.

Limitation period and defects liability: Article being drafted

Confidentiality and Intellectual Property Rights: issues for Staff on Secondment Loss Prevention Guidance drafted to address some of the issues arising from secondment of staff.

Signing contracts under duress: Newsletter article being prepared.

Client Guide: What Institutions, Trade Associations or other organisations might a Client expect a Geotechnical/Geoenvironmental Company and their employees to belong to? Paper in preparation.

Piling Damage to Live Railway Tunnel. Paper in preparation.


Article Loss Prevention

PI Requests for Higher Limits of Indemnity

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Professional Indemnity Insurance ~ Requests for higher Limits of Indemnity

It is not unusual for Consultants to be faced with a request for a higher limit of indemnity. The limit required may be much higher than the general limit of indemnity usually maintained by the Consultant for their activities. Requests for such higher limits can also be exacerbated by the low level of fee the Consultant may receive for the services, relative to the limit of indemnity being requested by the client. The following sets out some of the common queries relating to higher limits of indemnity.

Do I have to increase cover for all work or can cover be increased on a project specific basis?

It is worth being aware that some Insurers may be prepared to provide an increased limit of indemnity on a project, client or work type specific basis. In some cases, this may provide you with a more cost effective solution to the required increase. However, due to insurers minimum premium levels, there may be no cost benefit to increasing your cover in this way and the cost of increasing cover for all work could be the same as the cost of increasing cover on a project specific basis. Your broker will be able to advise you on what options may be available to you.

Can I pay a one-off premium for the increased limit of indemnity?

It is extremely important to remember that any increase in your limit of indemnity will not just incur a one-off premium for the current policy period. Professional Indemnity insurance (PII) is a ‘claims made’ form of insurance and cover will need to be renewed, to include the increased limit, on an annual basis to cover future claims. When increasing your limit of indemnity, consideration should therefore be given to the long- term costs, as the requirement to maintain a higher limit is likely to run for six or twelve years following completion of your services. Your insurers are likely to require an additional premium for the top-up arrangement long after the fees for the project have been received and these long-term additional costs should be given consideration in your fee bid.

My contract requires me to maintain the increased limit of indemnity for 12 years following completion of my services, how much will this cost?

It is impossible to predict the future cost of PII premiums as the cost of insurance can fluctuate from one year to the next.  Premiums will be affected by claims experience and future capacity in the insurance market and allowance should be made for possible future premium increases when looking at the long-term potential costs of maintaining higher limits of indemnity.

Although it will not absolve you from any liability to the client, any contractual requirement to maintain PII should be made subject to its continuing availability in the UK market at commercially reasonable rates.


The above is a general overview only and for specific advice on increasing your limit of indemnity please contact your professional indemnity insurance broker.


Griffiths & Armour Professional Risks
Sarah McNeill

Article Contaminated Land Laboratories Loss Prevention Safety

Asbestos PII Update

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The subject of asbestos cover is one that has been in the spotlight for many years since the restriction (and in some cases the complete withdrawal) of professional indemnity insurance (PII) cover for asbestos risks in 2002/03.

Wider cover is now available in the PII market to those consultancy firms that might inadvertently come across asbestos in the normal course of their activities, although it will not usually be offered to those firms undertaking asbestos inspections.

In the past, cover has generally only been available for negligence claims in respect of the direct cost of remediation or diminution in value of property due to the presence of asbestos. Any indirect costs, such as consequential delay costs, would have been excluded. With a few exceptions, cover can now be obtained for any asbestos related negligence claims regardless of whether the loss in question relates directly to remediation or diminution in value, and cover will therefore extend to cover economic and consequential losses. The exceptions relate to bodily injury claims and claims relating to property located outside the United Kingdom (including the Channel Islands or the Isle of Man) and the Republic of Ireland, which continue to be generally excluded.

Those firms undertaking ‘management’ and ‘refurbishment or demolition’ surveys as described in the Health and Safety Executive guide HSG264 (previously known as type I, II or III asbestos surveys) or similar surveys are unlikely to qualify for the wider cover and will need to negotiate specific cover with their insurers or approach a specialist provider. Consultants with UKAS accreditation should note that UKAS requires Accredited Bodies to carry asbestos cover for bodily injury claims and this is available to such bodies via specialist markets. If you require assistance with this, then please do not hesitate to contact Griffiths & Armour using the contact details below.

For those consultants who may appoint sub-consultants to undertake asbestos inspections on their behalf it is worth remembering that, in the eyes of the law, you are fully responsible for their actions and any claim that arises from work they may have undertaken is likely to expose the consultant’s PII policy in the first instance. If you are appointing third parties to undertake asbestos inspections then you should check the terms of your PII policy to ensure that you are adequately protected.

The scope of cover provided under PII policies can vary considerably and if you are in any doubt about the extent of asbestos cover under your own PII policy you should consult with your broker for further advice.

Griffiths & Armour Professional Risks
0151 600 2071