Contract Terms - Overall Limitations of Liability
 
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Contract Terms - Overall Limitations of Liability

      1/11/2006

Curtis Davis Garrard (UK), a firm that combines legal expertise with industry knowledge, published and article about professional liability. Marine professionals (surveyors, designers, naval architects, etc.) operating in any of the marine industries as an independent contractor should endeavour to limit their exposure to claims by ensuring that their terms and conditions incorporate suitable limitations on their liability. This is so whether the work being done relates to luxury yachts, commercial ships or floating drilling and production equipment for use offshore in exploration and production activities and should be done irrespective of the scale and value of the specific project.

The incidence of claims being brought against marine professionals is on the increase. In particular projects involving the conversion or upgrading of a vessel, have become more involved and more complex. Delays and cost overruns have become common place with such projects over the years, with parties seeking to allocate responsibility for the consequences. Lack of front end preparation has been identified as the key cause of losses. As a result heavier reliance is now placed upon marine professionals with regard to suitability studies, surveys and design/scheduling at the beginning of the project. What a marine professional is able to achieve by agreement with his client in limiting his liability will largely depend upon the market and, in particular, what the competition are offering. Rarely, however, will a marine professional be selected for work on the strength of his willingness to assume liability for his negligence!

As a starting point, it is clearly appropriate for a marine professional to limit his liability overall he is essentially a provider of services and advice. He is not bearing the risk (or rewards) of the project; he has no equity interest. His financial interest is capped at the level of his potential or actual fees. Thus any liability he may assume for any losses arising from the services and advice provided should be limited to a sensible and reasonable amount in the circumstances. Further, any overall limitation should be co-extensive with the scope of the entire services provided. It should extend to any services beyond the original scope of work whether or not contemplated at the time the contract is made. Otherwise, it may be said that the limitation applies only to the original scope of work and that any new or extra work performed has been undertaken without any such limitation applying.


Curtis Davis Garrard  

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