Can a surveyor rely upon exclusion clauses to limit liability?

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It is general practice for surveyors to seek to limit their liability by inserting clauses into their terms and conditions limiting the extent of liability owed to particular person ie third parties and seeking to set out and limit the scope of particular services.

Should such a clause be deemed to be unreasonable within the meaning of the Unfair Contract Terms Act 1977 where it affects modestly priced domestic homes there has been a trend by the courts not to uphold such clauses.

In the case of Smith v Bush [1990] 1 AC 831 the application of the Unfair Contract Terms Act 1997 was considered, in particular, its application to notice and clauses seeking to exclude a duty and liability. It was argued on behalf of the valuer that as there was no contract between a valuer and a purchaser that as the purchaser was obtaining the valuation for free that the valuer should not have to accept liability when no consideration had been given by the purchaser only by the mortgagee.

This argument put forward was not accepted by the court. Lord Templeman stated: “The valuer is a professional man who offers his services for reward. He is paid for those services. The valuer knows that 90 per cent of purchasers in fact rely on a mortgage valuation and do not commission their own survey. There is great pressure on a purchaser to rely on the mortgage valuation…moreover, he knows that mortgagees, such as building societies and the council…are trustworthy and that they appoint careful and competent valuers and he trusts the professional man so appointed. Finally, the valuer knows full well that failure to exercise reasonable care and skill may be disastrous to the purchaser”.

The court stated that when considering whether or not an exclusion clause is unreasonable factors that should be taken in to account are:

  1. Whether the parties are of equal bargaining power;
  2. Whether it would have been reasonably practicable to obtain the advice from an alternative source having regard to time and cost;
  3. How difficult the task was for which liability is being excluded;
  4. The practical consequences of the decision on the question of reasonableness;
  5. Who employed the suveyor/valuer.

It is of note that the courts are inclined to allow the application of the Unfair Contract Terms Act 1977 where domestic properties at the lower end of the market are involved.

 

This article does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered.

 

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