Geotechnical News September 2011
39
GEO-INTEREST
The issue in this case was whether
the clause is broad enough to include
gratuitous oral statements, including
statements that the home was a “great
house” in “good shape” and that
necessary repairs would be $6,000.
10
The Alberta Court of Queen’s Bench
held that as the statements were made
outside the terms of contract, the
statements were not protected by the
limitation of liability clause:
The clause in this case purports to
exclude liability beyond the Guar-
antee for all claims “whatsoever
their nature and whether arising
from negligence or other tort, in
contract or from any other source
or cause.” Strictly construed against
Housemaster, this clause should be
read narrowly to exclude liability
for a breach of contract or negli-
gence in relation to the performance
of that contract. Without clearer
construction, the clause cannot ex-
clude Housemaster from any neg-
ligence under any circumstances.
Therefore, the clause cannot pro-
tect Housemaster from liability for
negligence in relation to actions
performed outside the terms of the
contract.
11
The contract did not provide for
assessments of repair costs and it
was not in the inspector’s practice
to provide the assessment, so such a
representation was made outside the
terms of the contract.
Note that the court’s finding was
assisted by a clause in the agreement
related to oral representations, stating
that the written report constituted the
inspection results and that oral repre-
sentations would not alter the interpre-
tation of the inspection results.
6. Incorporate all documents into
the Contract or Agreement con-
taining the disclaimer(s).
In
Salgado v. Toth
, clause 16(b) stated
“[B]y signing the Property Inspection
10
Ibid.
at para. 30.
11
Ibid.
at para. 51..
Contract, the CLIENT acknowledges,
covenants and agrees that: b) The
INSPECTOR has not made any
representations or warranties other than
those contained in the Contract.” Clause
16(b) was not enforced by the court as
the Inspection Report was a separate
document and the representations and
warrantieswere contained in that report,
not the contract. The Contract did not
incorporate the subsequent reporting
pages on which the representations and
warranties were contained. The court
held that
While it may have been the in-
tent of paragraph 16(b) to exclude
representations or warranties that
arose outside the Contract, it could
not have been in the contemplation
of the parties that a reference to a
document containing no representa-
tions or warranties would exclude
representations or warranties that
were made to induce the Plaintiffs
to enter into the Contract or which
were contained in the oral or writ-
ten report subsequently provided by
Mr. Toth.
12
Other Examples of Disclaimers
The following contractual provisions
were upheld by the British Columbia
Supreme Court in
Salgado v. Toth:
2. The condition of certain systems,
components and equipment will be
randomly sampled by the inspector.
Examples of such systems, com-
ponents and equipment are win-
dow/door operation and hardware,
electrical receptacles, switches and
lights, cabinet/countertop mounts
and functions, insulation depth,
mortar, masonry, paint and caulk-
ing integrity and roof covering ma-
terials. Furniture, rugs, appliances,
stored items, etc. will not be moved
for the inspection.
3. The INSPECTOR will give a pro-
fessional opinion on whether those
12
Salgado, supra
note 4 at 77.
items inspected are performing their
intended function at the time of the
inspection or are in need of imme-
diate repair. The inspection and re-
port are based upon observations of
conditions that exist at the time the
inspection was performed.
4. Cost estimates, if provided, are
“ballpark” estimates only and are
not intended to be relied upon by
any person for accuracy. The CLI-
ENT should obtain written bids
from qualified licensed contractors
in order to determine the possible
cost of repairs.
6. The Client is encouraged to par-
ticipate in the visual inspection pro-
cess and accepts responsibility for
the consequences of electing not
to do so, i.e. incomplete informa-
tion being available to the Inspector.
This Client’s participation shall be
at the Client’s own risk for injuries,
falls, property damage, etc;
13
Conclusion
Disclaimer clauses are a professionals’
shield to defend themselves against
the client’s sword. Disclaimers have
become a necessary part of doing
business in the litigation environment.
They are ethical and mandatory. Your
disclaimer should be read and updated
and not casually inserted as part of
the boilerplate. Your disclaimer may
be negotiated, limited or expanded
depending on the circumstances
but it should always be considered
as your safeguard to ensure that
your professional opinion is not
inappropriately used…but don’t rely
on my advice!
Neil Abbott, Partner, Gowling Lafleur
Henderson LLP, 1 First Canadian
Place, 100 King Street West, Suite
1600, Toronto, Ontario M5X 1G5, T
416 862-4376, F 416-863-3476,
Bauer v. Bank of Montreal
, [1980] S.C.J. No. 46.
13
Ibid.
at 13.
