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Chapter 12
Chapter 12 groups material addressing defenses to claims of design
professional liability in one chapter. Although largely self–explanatory, at least
some class time should be devoted to contractual risk control (Section 12.7). This
topic continues a theme begun in Chapter 11 (with regard to contract
disclaimers): use of contract language to further one’s (reasonable) protections
from liability.
To what extent should parties be free to structure their own liability? How low
can the damages amount be before the students find the deal is simply unfair to
the client? The chapter gives an example of such a clause with a $50,000 cap.
Would that be fair if the underlying project was for $500,000? $1 million? $10
million?
What are the public policy considerations in creating a private statute of
limitations? Parties who know what they are doing should have the freedom to
limit liability to a designated period of time. This is done in surety bonds and
insurance policies. The difficult problems relate to judicial activism to protect
claimants. Any period selected must be reasonable. We doubt that a six month
limit would be enforced. It is much shorter than the statutory period. Other
factors are: (1) the experience of the party in effect waiving its legal rights (here
Answers to Chapter Questions
1.) If a defect is known to the owner at the time of acceptance, and the owner did not
object or reduce payment due the contractor or designer, has the owner waived any
claim against the contractor or designer?
2.) If a contractor sues a design professional for economic losses caused by a defective
design, when does the statue of limitations period begin?
3.) What is the difference between the immunity a judge receives versus the quasi–
judicial immunity that is given to a design professional who acts as an arbitrator?
4.) What are the two broad categories of legislative protections for design
professionals?
5.) What are certificate of merit statutes and how do they function?
6.) What are some words that should be avoided in the contract of a design professional
in regard to their standard of performance?
7.) What is the purpose of a “limitation of liability” clause and how is the maximum
amount of damages determined?
8.) If a client sues both the contractor and the design professional, and settles or
obtains a judgment against the contractor, how might this be of benefit to the design
professional?
9.) What are two methods that parties can use to define the statute of limitations in a
contract?
10.) Under what conditions are exculpatory clauses enforced?
