Posted by: Daryl & Wendy Ashby | March 28, 2010

Exclusionary Clauses

Often contracts for service will provide what is referred to as an “exclusionary clause” which is intended to limit the service provider’s liability should something go terribly wrong.

One such case hit the courts recently and found the service provider negligent to the tune of $160,000. No small change for a small operator.

It appears a building inspector neglected to report on some “rot and moisture” within a pre-purchase inspection of a home the plaintiff’s were purchasing.

The courts determined that the negligence was “not particularly unusual, but the inspector had fallen short of the standard expected of a prudent inspector in discovering a structural instability in the home.”

The inspector had provided the following clause within his standard contract, “The inspection and report are not intended nor are to be used as a guarantee or warranty, expressed or implied, regarding the future adequacy, performance or condition of any inspected structure, item or system, the inspector is not an insurer of any inspected condition.”

Despite the clause, the court found that the clause did not protect the inspector against present adequacy or a condition existent in a structure at the time of inspection. The court further found that the inspector “ought to have known that the buyers intended to rely upon the inspection report, it ws incumbent upon the home inspector to draw to the buyer’s attention the onerous terms of the agreement and ensure that they read and understood them.”

So the lesson for today is; the $400 required for a building inspection can be money well spent, and read and understand all contracts you intend to sign.

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