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Geotechnical News September 2011
GEO-INTEREST
was upheld, but its scope was narrowed
significantly (see “What to Disclaim -
An Example: Salgado v. Toth” below).
4
2. Bring the disclaimer(s) to the at-
tention of the signor before the
inspection is done.
The time when the notice is alleged
to have been given is of great impor-
tance. No excluding or limiting term
will avail the party seeking its pro-
tection unless it has been brought
adequately to the attention of the
other party before the contract is
made. A belated notice is valueless.
5
In Fraser v. Knox
, an inspection re-
port was given to the homeowner after
the inspection was complete, though
the report stated “I hereby authorize the
inspection of the Property having read
and understood this [Inspection Agree-
ment contained within the Report].
6
”
The inspection agreement contained a
limitation of liability clause. The court
held that the clause is unenforceable
since the homeowner should have had
the opportunity to negotiate in regards
to the term or have the option of retain-
ing an inspector who would not have
such a clause in their contract.
3. Be careful in drafting the dis-
claimer as it will be strictly con-
strued
.
In Queen v. Cognos Inc.,
Iacobucci J. states:
It is trite law that, in determining
whether or not a limitation (or exclu-
sion) of liability clause protects a de-
fendant in a particular situation, the
first step is to interpret the clause to
see if it applies to the tort or breach of
contract complained of. If the clause
is wide enough to cover, for example,
the defendant’s negligence, then it may
operate to limit effectively the defen-
dant’s liability for the breach of a com-
4
Salgado v. Toth
, 2009 Carswell BC 3020 [
Sal-
gado
].
5
Fifoot and Furmston The Law of Contract, 11th
ed. by M.P. Furmston (London: Butterworths,
1986) at 152.
6
Fraser v. Knox
, [1998] O.J. No. 4379 at paras.
44-47.
mon law duty of care, subject to any
overriding considerations.
7
4. Be precise, complete and compre-
hensive and read the case of
SAL-
GADO V. TOTH
8
Salgado
is instructive on how
Courts will interpret contract disclaim-
ers that are not comprehensive or com-
plete. The following contractual provi-
sions were not upheld by the British
Columbia Supreme Court:
1. The INSPECTOR will perform a
VISUAL INSPECTION of the read-
ily accessible and visible areas of the
major systems and components of
the Primary Residence on the Prop-
erty and certain built-in equipment
and improvements. The inspection
and report are not intended to reflect
on the market value of the Property
nor to make any recommendation as
to the advisability of purchase.
The BC Supreme Court held that
paragraph 1 of the contract did not
contain wording which would limit
liability and while the inspector may
not have intended the inspection to
constitute a recommendation as to
the advisability of the purchase, the
owner was entitled to rely on such
recommendations if made.
9. THE INSPECTION AND RE-
PORT ARE NOT INTENDED
NOR ARE TO BE USED AS A
GUARANTEE OR WARRANTY,
EXPRESSED OR IMPLIED, RE-
GARDING THE FUTURE AD-
EQUACY, PERFORMANCE OR
CONDITION OF ANY INSPECT-
ED STRUCTURE, ITEM OR SYS-
TEM. THE INSPECTOR IS NOT
AN INSURER OF ANY INSPECT-
ED CONDITIONS.
The court applied the doctrine of
contra proferentum and held that
the disclaimer is not broad enough
to include guarantees or warranties
regarding the present adequacy of the
inspected structure.
7
Queen v. Cognos Inc
., [1993] 1 S.C.R. 87
(S.C.C.) at para. 91.
8
Salgado, supra
note 4 at para. 13.
13. It is understood and agreed that
should the INSPECTOR be found
liable for any loss or damages re-
sulting from a failure to perform any
obligations, including but not limit-
ed to negligence, breach of contract,
or otherwise, then the liability of the
INSPECTOR shall be limited to a
sum equal to the amount of the fee
paid by the CLIENT for the Inspec-
tion and Report.
In the contract, “Inspector” was defined
as the inspection company and not the
inspector personally. Therefore, the
court held that this paragraph did not
exclude liability for the inspector.
5. Beware of oral statements made
during the inspection.
In Whighton v. Integrity Inspections
Inc.,
the Inspection Order Agreement
contained a limitation of liability clause
preventing the client from claiming
damages over $10,000:
3. LIABILITY. The inspection
should not be considered a techni-
cally exhaustive inspection or an
insurance policy against unexpected
house repair/replacement needs.
The Client acknowledges that there
is risk involved in purchasing a
property and that the purpose of the
Inspection and the Guarantee is to
reduce that risk but not eliminate
it. Furthermore, the Client agrees
that the performance of the Inspec-
tion does not transfer that risk to
the Company beyond the Guarantee
limits.
.....
The Company’s liability for any
Client claims, beyond the Guar-
antee, is limited to a maximum
of the home inspection fee paid.
The limitations in liability herein
apply to all claims, whatsoever
their nature and whether arising
from negligence or other tort, in
contract or from any other source
or cause.
9
9
Whighton v. Integrity Inspections Inc
., 2007
CarswellAlta 376 at para. 47
