Limitation On Liability

At a recent seminar on architect's liability, one of the lecturers suggested that architects attempt to limit the amount of their liability by contract. He strongly hinted that the owner-architect agreement contain a clause limiting total liability to a certain amount (say $50,000) or his professional fee, whichever was greater. An air of electricity charged through the room as attentive architects viewed this suggestion as a panacea to protect them against dreaded lawsuits. It isn't!

Apart from the fact that such liability limitations would be frowned upon by the courts and reluctantly enforced-if at all-there are more practical problems involved.

Picture an architect who, after boasting of his firm's capability to a prospective client, hands a proposed contract to the owner in which he seeks to limit his liability for negligent acts, errors or omissions. The owner's impression of this architect would undoubtedly dwindle.

Unless the owner is offered some consideration in exchange for the limitation of liability prompting him to assume part of the risk of negligence, errors or omissions of the designer, there would be very little to persuade him to agree to such a proposition. An error in a critical area of design may very well result in a loss to the project owner far in excess of the architect's fee or even the cost of the building itself. Limiting the architect's or engineer's exposure to a fixed dollar amount or to the amount of his fee bears no relationship to any potential loss from professional malpractice.

The architect or design consultant considering the use of liability limitation provisions should give very careful thought. Even if such limitations are legally enforceable, the practicalities involved may dissuade him.

When an astute owner notices a liability-limit clause in the contract, he may well decide to "throw the baby out with the bath water" and the cagey architect could be left fishing for another client.

Owners and (according to recent reports) even architects involved in engaging consultants should carefully review proposed design professional contracts looking for clauses attempting to limit liability.

They may be double-edged swords!