Proportionate liability clauses are not inherently unfair

Proportionate liability clauses are a common feature in professional firms’ engagement letters. But there has been very little case law on whether they work or not. The Court of Appeal has now overturned a first-instance decision in West v Ian Finlay & Associates [2014] EWCA Civ 316 and held that a net contribution clause in a professional appointment was effective in limiting an architect’s liability. The Court of Appeal said that such clauses, in principle, are not unfair or unreasonable.

Ian Finlay & Associates, an architectural firm, was engaged in relation to the refurbishment of the Wests’ home. Mr and Mrs West also engaged a main contractor (recommended by the architect) to carry out the works. On completion of the works, significant defects were discovered that caused damp and required remedial work.

The contractor went insolvent, and the Wests brought a claim against the architect alone. The architect alleged that, as the building contractor had also been at fault, a net contribution clause limited its liability…

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