Limitations and exclusions of liability—consultant appointments
Limitations and exclusions of liability—consultant appointments

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Limitations and exclusions of liability—consultant appointments
  • Why consultants seek to limit their liability
  • Consultant body standard form appointments
  • Royal Institute of British Architects (RIBA)
  • Association for Consultancy and Engineering (ACE)
  • Royal Institution of Chartered Surveyors (RICS)
  • Construction Industry Council (CIC)
  • Third party documents
  • Practical considerations

This Practice Note provides specific guidance on exclusions and limits of liability relevant to consultant appointments. It should be read alongside Practice Note: Limiting liability in construction contracts, which provides more detailed information.

Why consultants seek to limit their liability

Professional consultants who carry out design and/or other professional services for construction projects will usually have their own professional indemnity (PI) insurance policies in place in order to protect them if they get sued for a breach of a professional duty. It is usually a requirement of all professional appointments that consultants are required to take out and maintain PI insurance. PI insurance not only protects the consultant, but also protects the relevant employer, as it knows that there is a certain amount of money available, albeit from insurers, to cover any claim against the consultant. For more information on PI insurance, please refer to Practice Note: Professional indemnity insurance in construction projects.

PI insurance is, however, expensive, and the level of cover taken out by most consultants is unlikely to cover all potential claims, particularly on larger projects. For this reason many consultants try to limit their overall liability in their appointments. Alternatively, they may seek to exclude certain types of liability such as indirect or consequential loss. The most common ways for a consultant to limit or exclude its liability are:

  1. financial caps on liability

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  • net contribution clauses (see Practice Note: Net contribution clauses in construction contracts)
    1. exclusions of specific types of loss

  • Some projects may expose consultants to specific types of risk which they will wish to avoid, for example claims in relation to asbestos. This is unlikely to be an issue on new build projects, but may arise where an existing building is being refurbished.

    Where a consultant's appointment on a project is a bespoke document prepared by the lawyers acting for the employer, it is unlikely to contain any 'consultant friendly' limitations or exclusions of liability. In this situation, the consultant will need to negotiate the inclusion of the clauses it needs. Alternatively, if a consultant is permitted to use its own standard terms or its own professional body standard form, these will generally contain the relevant clauses, but they may be resisted by the employer.

    Consultant body standard form appointments

    The most frequently used consultant body standard forms all contain at least one form of limitation or exclusion of liability:

    Royal Institute of British Architects (RIBA)

    The RIBA Standard Professional Services Contract 2020: Architectural Services (and its predecessors the RIBA Standard Professional Services Contract 2020: Architectural Services and the RIBA Standard Conditions of Appointment for an Architect 2010) contains a limit of liability which caps the architect's liability for loss or damage to the level of PI insurance held by the architect. The limitation also absolves any employee of the architect from any personal liability.

    The appointment (both editions) also contains an extensive net contribution clause which states that the architect's liability will only extend to that for which it is responsible, and that all contractors and consultants will be deemed to have provided similar contractual undertakings.

    For more information on the RIBA form of appointment, see Practice Notes: RIBA Standard Professional Services Contract 2020 for Architectural Services, RIBA Standard Professional Services Contract 2018 for Architectural Services and RIBA Standard Agreement 2010: Architect.

    Association for Consultancy and Engineering (ACE)

    The ACE Professional Services Agreement 2017 contains an overall cap on liability for an amount to be agreed by the parties and inserted in the agreement. If no amount is inserted, then the default is ten times the fee payable to the consultant. The limitation clause further absolves individual employees of any personal liability. There is also an exclusion of liability for any direct or indirect loss of profit, business, anticipated saving or consequential or indirect damage. Finally, there is a net contribution clause.

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