contract vs tort

Contract vs. Tort: Where Malaysian Architects & Engineers Get Caught (and How to Avoid It)

/ Liability Insurance, Sharing / By

When a construction dispute lands on your desk, two legal paths usually shape your exposure: contract and tort (negligence).

For Malaysian architects and engineers, understanding the difference—and how both can apply at the same time—is essential to reduce risk, defend your work, and keep projects moving. This guide breaks down the basics in plain language, shares practical scenarios, and shows how professional indemnity insurance for architect and professional indemnity insurance for engineers protect your practice when things go wrong.

Contract vs. Tort in simple terms

Contract liability

Comes from what you agreed to do in your appointment or the project’s standard form (often PAM 2018). It’s about promises—scope, deliverables, timelines, roles, and fee. If you don’t perform to the standard in the agreement, you may be in breach of contract.

Tort (negligence)

About a duty of care you owe as a professional—regardless of the contract. To succeed, a claimant typically shows four elements: duty of care, breach of that duty, causation, and loss. The benchmark is “reasonable skill and care” expected of a competent professional in similar circumstances.

In practice, both can be alleged together: “You breached your contract and you were negligent.” That’s why documentation, scope clarity, and the right PII are critical.

Where professionals get caught: 5 Malaysian scenarios

1) Temporary works vs. permanent works

  • The trap: Your appointment covers permanent works; the contractor handles temporary works. A partial collapse occurs during construction and fingers point at everyone.
  • Why exposure arises: If temporary works affect the safety or integrity of permanent works, you may still face questions about coordination, review, or warnings.
  • How to reduce risk: Define who designs what, and how temporary works interface with your permanent design. Ask for method statements on high-risk operations (deep excavations, heavy propping, top-down sequences) and keep written advice when you flag concerns.

2) Specialist consultants and delegated design

  • The trap: You rely on a façade/fire/geotech specialist engaged by the client or contractor. Later, defects emerge and the owner sues the “lead designer.”
  • Why exposure arises: Courts and clients examine whether you exercised reasonable care in coordinating the specialist’s inputs and highlighting gaps.
  • How to reduce risk: Put written limits on what you review (design intent vs. detailed calculation check), log design coordination meetings, and keep a design basis report that lists assumptions and responsibilities by discipline.

3) Means of escape and UBBL interpretations

  • The trap: Occupant loads change after leasing plans evolve (e.g., a cinema or larger F&B). Late in the project, authorities question exit widths and protected routes.
  • Why exposure arises: Even if the mix changed, the design team can be blamed for not updating egress calcs or issuing timely warnings.
  • How to reduce risk: Maintain a live egress/occupancy schedule, update when tenant mix changes, record your advice to the client, and minute authority clarifications.

4) Coordination errors (structure vs. M&E vs. architecture)

  • The trap: Transfer beam depths clash with main M&E ducts; re-routing at the 11th hour delays completion and triggers compensation claims.
  • Why exposure arises: Poor model coordination or late responses to RFIs are easy for a claimant to frame as negligence and breach.
  • How to reduce risk: Use clash detection with sign-off gates, maintain an RFI log with response times, and publish drawing issue sheets showing who had what, when.

5) Hillside and geotechnical uncertainty

  • The trap: Slope stabilization and retaining walls meet the “paper design,” but groundwater conditions are harsher than expected. Movement and distress appear.
  • Why exposure arises: Plaintiffs argue investigations were insufficient, warnings weren’t firm enough, or drainage details were inadequate for real weather patterns.
  • How to reduce risk: Commission geotech to the right standard, design to water (not just to soil), detail drainage and access for maintenance, and keep records of value-engineering decisions you did not endorse.

Why the contract still rules the battlefield

Standard forms (like PAM 2018) shape who does what, how variations are handled, and what “inspection” or “supervision” actually means. If your appointment is silent or vague, you’re exposed to “scope creep” arguments (“You were supervising the contractor!”). A tight appointment should:

  • Separate design responsibility from site inspections (observation vs. supervision).
  • Define reliance on specialists and the nature of your review.
  • Set a clear change control process (RFIs, instructions, revised drawings).
  • Identify exclusions (temporary works, shop drawing approval, contractor’s design portions).
  • Include a proportionate liability cap and robust intellectual property terms where feasible.

Good paperwork limits contract exposure—and helps your insurer defend negligence claims later.

How PII protects you (and what underwriters look for)

A strong professional indemnity insurance for architect or professional indemnity insurance for engineers policy typically covers:

  • Defence costs: Lawyers, experts, and investigations—usually with insurer consent.
  • Damages/settlements: When you’re found liable or agree a settlement.
  • Pre-claims assistance: Support when you spot a circumstance early—often the difference between a fix and a lawsuit.
  • Inquiry attendance & PR expenses: Sub-limits that help when regulators and the media get involved.
  • Useful extensions: Loss of documents, defamation, IP infringement, liability for consultants/subcontractors, joint-venture liability, run-off after project completion, continuous cover for prior-unknown matters (policy-dependent).

Underwriters love to see: written scopes, DBRs, peer review logs, authority minutes, RFI/change logs, and a clean notification culture (you tell them early when trouble brews). Present this in your renewal and you’re more likely to get better terms, higher limits, and faster claim support.

A step-by-step playbook to stay out of trouble

1. Write it down

Crystal-clear appointments and scopes for each discipline.

2. Own the DBR

Maintain a living Design Basis Report—codes, assumptions, loads, UBBL references, occupant loads, design changes.

3. Coordinate with proof

Scheduled clash reviews, recorded actions, and sign-offs.

4. Flag in writing

When risk appears (temporary works, slope cuts, egress load increases), issue written warnings and recommendations.

5. Peer review the big calls

Transfer structures, deep basements, smoke control, façade fire breaks, soil-retaining systems.

6. Keep the authority trail

Save emails, minutes, and circulars; note interpretations that affect drawings.

7. Notify your insurer early

A “circumstance” letter can unlock pre-claims support and contain costs.

8. Right-size your PII

Align limits to project value, LD exposure, and role (lead vs. specialist). Review extensions you really need.

The bottom line

In Malaysia’s construction environment—tight timelines, changing tenant mixes, and evolving code interpretations—both contract and tort risks are ever-present. The firms that thrive combine sharp paperwork, disciplined coordination, and well-structured professional indemnity insurance. Do the first two well, and the third becomes your financial shock absorber when a dispute still finds you.

Need help tailoring professional indemnity insurance for architect or professional indemnity insurance for engineers to your project mix? Talk to the team at Minaris Risk Management for right-sized limits, practical extensions, and fast, knowledgeable claims support.

Explore our range of coverages:

📞 Ready to secure your future? Contact us today.

Sources