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Policy Statement 388 - Waranty and Guarantee Clauses for Professional Engineering Service Contracts

Approved by the Engineering Practice Policy Committee on March 21, 2013
Approved by the Public Policy Committee on May 4, 2013
Adopted by the Board of Direction on July 12, 2013

Policy

The American Society of Civil Engineers (ASCE) opposes the inclusion of warranty, guarantee, or similar clauses in contracts for professional engineering services.

Issue

The inclusion of warranty or guarantee clauses in contracts for professional engineering services has been proposed as a way to enhance facility design and longevity, and protect project owners.  Warranty and guarantee clauses are troublesome because:

  • Engineering firms depend upon professional liability insurance to provide protection against catastrophic claims;
  • Professional liability insurance policies specifically exclude coverage for any claim and claim expenses based upon or arising out of express warranties or guarantees;
  • A warranty is an assurance by one party to the other party that specific facts or conditions are true; and the other party is permitted to rely on that assurance and seek some type of remedy if those facts or conditions are not true, or if some problem arises from those facts or conditions not being true;
  • Warranty and guarantee clauses therefore create an absolute liability on the part of the warrantor or guarantor and obligate the engineer to make good with regard to matters that may be beyond their control, such as unforeseeable conditions or post-construction operation and maintenance and matters that are beyond the standards of practice;
  • Without professional liability insurance coverage, providing a warrantee or guarantee could cost the guarantor substantial sums of money and potentially be financially crippling;
  • Project owners currently are protected from substandard engineering services by the existing body of contract and negligence law, and design errors and omissions can be insured by available professional liability insurance; and
  • Inclusion of such warranty and guarantee clauses may limit the ability of firms to provide engineering services.

Rationale

A design professional can only offer to perform services in accordance with the usual and customary standard of care.  Alternative and more effective ways of ensuring public safety and protecting project owners exist such as:

  • Qualifications based selection of engineers;
  • Emphasis in the design process of life-cycle costing which optimizes cost and quality;
  • Greater consideration to funding a higher degree of maintenance;
  • Implementation procedures to reduce delays in planning, right-of-way acquisition, design, and construction;
  • Encouragement of innovations in technology and management;
  • At the start of a project, proper allocation of a project's risk among the parties involved such as via an Engineers’ Joint Contract Documents Committee (EJCDC) Agreement;
  • Enhancement and simplification of minimum design standards to provide more cost effective results;
  • Provision of greater latitude to owners to utilize design standards which exceed the minimum; and
  • Implementation of quality assurance/quality control procedures.

Inclusion of warranty or guarantee clauses in an engineering contract may severely damage a design professional, provide a false sense of security, and is not in the public’s best interest.

ASCE Policy Statement 388
First Approved in 1991