Q.
The earlier case of Valuer giving a report which was relied upon by another buyer who suffered a loss (pure economic loss) - if a disclaimer was incorporated in the report - would it therefore shield the Valuer from liability?
A.
This is generally the case. It shields the author from liability as it makes the facts known that there are possible variables which render the report unsound thereafter hindering the judgment. Hence, disclaimer has effect in shielding the originator from liabilities.
However, a professional opinion is construed as of higher standard than people on the street as it follows the standard of that profession, as are doctors, accountants, engineers and in this case, Valuers. The Bolam Test used for evaluating the 'standard of care' of a 'reasonable man' and 'skilled defendant' is very much explained by:
BOLAM V FRIERN HOSPITAL MANAGEMENT COMMITTEE [1957] 2 ALL ER 118
FACTS:
The plaintiff suffered injury after receiving treatment at the defendant's hospital. There was inconclusive debate between medical experts about whether the treatment had been administered in the safest way.
What standard of care is required?
A junior doctor must show the same degree of skill as a reasonable doctor. Furthermore, the Bolam test means that a doctor is not in breach of his duty if he acted in accordance with a practice accepted as proper by a responsible body of medical opinion.
McNair J: ..A man need not possess the highest expert skill; it is well established law that it is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art....
Hence, the Valuer's report is held as a (high) standard of the profession of Valuers. It is relied by third parties like Banks and Financial Institution to assess the market value of the property. Thus, it should be held as a standard relied upon by user of the report for decision making including investment or bidding for auction/sales.
Now, this very same report is given a disclaimer to expressly state that it is not for everyone and everything it said it is. The commercial reasons aside, for Valuers make a living charging a fee for the valuation report, thus would prefer to issue a new report for a fee rather than allowing duplication.
Thus, is this disclaimer valid when it is relied upon by a third party user? As in the above question, a third party user suffered a loss because of this same report.
Generally, a disclaimer would shield the author from liability. However, it may be argued from a case below to the contrary.
SMITH V ERIC BUSH AND HARRIS V WYRE FOREST DC [1990] 1 AC 831
FACTS:
The conjoined cases involved plaintiffs who were house buyers who suffered pure economic loss. The houses were negligently valued by the defendants, who were surveyors employed by third parties, the mortgage lenders. The defendants argued that disclaimers exempted them from liability.
ISSUE:
HELD:
The House of Lords found that the defendants owed a duty of care to the plaintiffs as they were proximate third parties. The UCTA 1977* applied as the valuations were provided in the course of business. The courts found that the disclaimers were unreasonable.
- Did the parties have equal bargaining power?
- Would it have been reasonably practicable to obtain the advice from an alternative source taking into account considerations of costs and time?
- How difficult is the task being undertaken for which liability is being excluded?
- What are the practical consequences of the decision in relation to the parties' ability to bear the loss involved, especially with regard to insurance?
The Unfair Contract Terms Act 1977 (c 50) is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most important functions is limiting the applicability of disclaimers of liability. The terms extend to both actual contract terms and notices that are seen to constitute a contractual obligation.
www.bitsoflaw.org/tort/negligence/study-note/degree/pure-economic-loss-liability-statement