Key personnel?

Key personnelFor some reason that has never been explained to us simple commercial lawyers, commercial law is rarely recognised as one area of law.  This means that cases in one field of contractual law can easily be missed by another.  For example,  take a recent judgement of the Technology and Construction Court (TCC): Fitzroy Robinson Ltd -v- Mentmore Towers Ltd.

The case involved the appointment of architects.  It has been widely reported in construction law updates but we have not seen any reference to it,  for example, in IT law updates.  This is a mistake, as the case has much more universal application.

In essence, the leader of the architects’ team, who had been named as project leader on the bid documents to the client and had been involved in all the pre-contract meetings, resigned from the architects just before the appointment agreements were signed.  However, his notice period was long (one year), so he did start working on the relevant projects.  At a critical later point in the project, the client was informed that the project leader had given his notice.  Naturally, the client became upset that the project was losing a key person.  At the TCC, the failure by the architects to tell the client that the key person had resigned was held to be fraudulent misrepresentation.

So what are the lessons?

  • Firstly, all professional consultants and service providers should inform their clients or customers of changes in key personnel. 
  • Secondly, particularly from clients’  point of view, if there are key personnnel,  then appropriate provisions must be included in the relevant consultancy or services agreement.  A finding of fraudulent misrepresentation alone may not be entirely helpful, given that a claimant must demonstrate that it suffered loss as a result of the misrepresentation.  The TCC suggested on the facts of Fitzroy Robinson that this would be limited to the cost of any disruption and duplication of work arising out of the key person’s resignation.