Smith v Eric Bush [1989] 2 All ER 514

• Plaintiff had a contract with Defendant for Defendant to value his house.

• Defendant inserted a clause that he would not be liable for his actions in the course of his work. Defendant incorrectly valued the house, causing Plaintiff loss and it had been held that he had a tortious duty to Plaintiff.

• HL ruled that the disclaimer of liability was ineffective and did not shield Defendant from liability. 

Lord Griffiths

• S.11 (3) and s.13(1) of UCTA create a “but for” test: would a tortious remedy be available but for the existence of the exclusion of liability?

• The act is intended (according to LC) to apply to exclusion clauses regarding tortious liability that would arise in the course of someone’s business (as well as normal contractual exemption clauses). Hence the act’s controls apply here.

• The next step is to ask whether the exclusion clause satisfies the reasonableness requirements of s.2(2) of the act. The burden is on Defendant (the surveyor) to show that the exemption notice (the disclaimer) is reasonable.

• Some factors (not exhaustive list) to be considered: relative bargaining power of parties; Availability of alternative sources of advice e.g. in this case other surveyors, though this would be far more costly and time consuming; difficulty of the task being undertaken (in this case it is not too burdensome on Defendant to require reasonable skill); practical consequences on the decision regarding reasonableness (in this case it would prevent careless surveyors from relying on their absence of insurance, which they ought to have, while it would NOT lead to a floodgate of claims).

• Given these considerations, the exemption disclaimer failed to satisfy the reasonableness requirements. 

Lord Templeman

• To allow the disclaimer to stand would be to legitimise all standard form disclaimers and “emasculate the 1977 Act”. 

Lord Jauncey

• “But for” the notice, it would be undeniable that Defendant would be liable to Plaintiff for negligence.

• He supports Lord Griffith’s reasoning behind the conclusion that the disclaimer was unreasonable.