Standards of Care

In contracts depending upon what you are purchasing there can be three different standards that may be used. There are standards of commitment that define the degree a party is committed to provide a product of perform a service. Those can range from absolute when you use the words will or shall all the way down to intend.The second standard is the standard of performance. These are used more frequently in service type contracts where the standard of performance can range at the highest to a standard being performed by an expert down to ordinary performance for a company in the industry. Standards of care address the degree of care that must be used in performing the work so that individuals are not injured or property is not damaged. The standard of care that you require will depend upon the circumstances and what you are purchasing.

If you were silent in a contract the courts would use the requirement that the care used in performing the service be that which a reasonable person would exercise under the circumstances. Buyers may want a much higher standard such as the highest standard of care or using the care of an expert. Supplier’s may want to reduce their potential liability by reducing the standard of care they want to provide.One example of that could be wanting to include a standard of ordinary care.One of the readers provided me with another example of a supplier attempting to reduce their potential liability by reducing the standard of care..

“Consultant and its Subcontractors will conduct all Work under the Agreement in accordance with the applicable professional standard of care of … to the best of Consultants knowledge.”

For the consultants the highest standard care would be that of an expert, so the first thing that are doing is reducing the standard of care that they use to only the applicable standard of care for the industry standard that they made reference to. That may be acceptable if you know that 1) there actually is a standard of care and 2) The standard of care is acceptable. If something is written by and industry group always remember that it is written for the benefit of the members of that industry, not the customers.The worst part of the language is they added a knowledge qualifier which would even excuse them further if they didn't have knowledge of the requirements in that standard of care for the industry. That is what I call Ostrich management where if you bury your head in the sand you won't know what's going on around you. Standards of care are like standards of commitment, the better one you can get,the better off you are.

When I write warranties for consulting services or software, the minimum I want is for them to use "reasonable care and skill" in performing the services. Most consultants will balk at including "expert" as that is the highest standard commitment. What you do want is for the work to be performed using the standard for the type of person you are contracting for to perform the work.

For example: If you were hiring and paying for an experienced consultant you might say "All work and services shall be performed using reasonable care and skill of an experienced consultant in __________________. The blank would identify the type of consulting they perform.

If there was an industry standard that worked, I might consider using something like "All work and services performed shall be performed using reasonable care and skill as specified in ____________ for an experienced consultant / engineer.

Knowledge qualifiers are not good in any standard.The reason is they can argue that that didn’t have knowledge so they are not responsible. If you are ever forced to include a knowledge qualifier, you want also include a statement that the supplier has performed reasonable diligence to discover the knowledge. For example the supplier may want to say:

“To the best of Supplier's knowledge, Supplier’s work and services shall performed shall be performed using reasonable care and skill as specified in ____________ for an experienced consultant / engineer.”

To include reasonable diligence it would be:

“After performing reasonable diligence and to the best of Supplier's knowledge, Supplier’s work and services shall performed shall be performed using reasonable care and skill as specified in ____________ for an experienced consultant / engineer.”

The impact of including the reasonable diligence commitment would be that if a reasonable person using reasonable diligence would have discovered the issue, the supplier can’t argue that they didn’t have knowledge. If they argue that they didn’t have knowledge, what they are saying is that they didn’t perform what they represented which was that they performed reasonable diligence.