Damages for breach of contract are not the only means by which general principles of law allow recovery of monetary compensation. There are a variety of other general principles that can also provide monetary compensation, depending on the circumstances. In the construction industry, one of the most commonly relied upon principles is the law of negligence. The tort of negligence is not concerned with a breach of a contract, but with wrongful acts. In fact, there need not be a formal contract at all, as long as it can be shown that one person owed a duty of care to another and that the duty of care has been breached.

There are four basic requirements to establishing an action in negligence, namely that:

  • one person owes a duty to take reasonable care to another;
  • the duty of care has been breached;
  • the breach of duty caused injury or damage to another; and
  • the loss sustained was not too remote a consequence of the breach of duty.

Duty of care

The contractual obligations which parties owe to each other arise by reason of the decision to enter into the contract with another person. It is only the other party to the contract who can complain about a breach of the contract. A duty of care arises by reason of a decision to undertake a particular activity, for example construct a building. People who are affected by the activity will potentially be able to complain about a breach of a duty of care. The person complaining may also have entered into a contract or may be a stranger. The law places limits on the categories of people who can complain about a breach of a duty of care.

As noted above, there are a wide range of duties of care which one person may owe to another. These may include, a duty to maintain a safe working place or to provide a certain professional standard of work.

Determining if a duty of care exists first requires the consideration of whether a party owes a duty of care to one or more categories of person defined by the courts. Some categories, such as between an employer and employee or professional and client, are well established. However, the courts are able to create new categories by analogy to existing categories or by consideration of various facts and public policy.

Breach of duty of care

Once it is found that a duty exists, it will be necessary to consider what standard is required of the person owing the duty of care. This is subjective and is determined by considering what a reasonable person would have done in the position of the person owing the duty of care. The test is not what a perfect person would have done.

It should be noted that the standard of care may be deemed to be higher if the person is a professional or holds themselves out as possessing a certain level of special skill. In that situation, the standard required would be what that type of person would be reasonably expected to have.


Once a breach has been established, it must be shown that any loss was caused, or at least materially contributed to, by the negligent act. It may be that there are a number of parties who materially contributed to the loss. Accordingly, damages may be apportioned according to each person's liability.

Finally, any award of damages may be reduced to the extent that a person themself contributed to the loss. This is referred to as contributory negligence.


Once causation is established, it should be considered whether the loss suffered was too remote. The courts require that the loss claimed must have been foreseeable by a reasonable person with that person's particular knowledge and skill. For example, a person building a garage will be deemed to have the skill and knowledge of a person who normally builds garages.


The operation of the law of negligence is best illustrated by way of examples. The following are potential situations for a principal, contractor or architect:

  • A superintendent gives incorrect information to a contractor digging a trench for cables. The contractor fractures a water pipe and the neighbour's property floods. The superintendent may be liable to the contractor for breaching a duty to give correct information.

  • A contractor builds defective foundations for a house. The house is later sold by its owner to a subsequent new owner who discovers significant structural issues with the house which were unknown before that time. The contractor may be liable to the second owner for his non-compliant workmanship, even though the contractor only had a contract with the original builder.

  • A principal partially demolishes a building on its site and leaves it unsecured. The building is left derelict and children play in it from time to time. This is to the principal's knowledge. A fire is later lit by the children, damaging an adjoining property. The principal may be liable to the adjoining property holder on the basis that it had a duty to not damage neighbouring property and this reasonably required, given the children playing in the building, security measures to be taken.


Brickhill v Cooke

[1984] 3 NSWLR 396


  • The prospective purchasers of a property engaged an engineer to inspect the property and prepare a written report.
  • The engineer concluded that the property was structurally sound.
  • After the property had been purchased, the new owners discovered that the property was not structurally sound and that the engineer had failed to identify five structural defects.


  • The engineer's failure to identify the structural defects, which should have been apparent on any reasonable inspection, meant that the engineer failed to perform the inspection with the reasonable degree of competence expected of a professional engineer.
  • The engineer's duty of care in relation to negligence existed alongside the engineer's contractual obligations.
  • This overlap between negligence and contract will be particularly apparent where a contract expressly or impliedly requires a professional person to use due care and skill.
  • The court ultimately determined that the engineer was liable to the new owners under the terms of their contract.
  • The court also recognised that the engineer could be liable to the new owners in negligence.

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