Disclaimer of liability for negligent advice to a non-client business (UCTA 1977 ss.2(2), 11(3), 13)
Vantage Surveyors LLP values a warehouse in England for Brightline Bank plc, which is considering a loan to Kestrel Logistics Ltd to buy it. Vantage knows that Kestrel will see the report and is likely to rely on it in deciding whether to buy. The report contains a prominent notice: 'No responsibility is accepted to any person other than Brightline Bank plc.' Kestrel, which is buying the warehouse for its business, relies on the report. The valuation was carelessly prepared and Kestrel suffers financial loss. There is no contract between Vantage and Kestrel.
Which of the following best describes the effect of the notice on any claim by Kestrel against Vantage in negligence?
Choose one answer to see the reasoning.
Worked answer
Correct answer E: The notice can be relied on only if it satisfies the requirement of reasonableness, as the 1977 Act also controls notices excluding the duty itself.
THE RULE TO REMEMBER
Under UCTA 1977 ss.2(2) and 13(1), a notice excluding negligence liability (or the duty itself) for loss other than personal injury is effective only if reasonable, judged under s.11(3) for non-contractual notices.
Disclaimer of liability for negligent advice to a non-client business (UCTA 1977 ss.2(2), 11(3), 13)
Section 2(2) of the Unfair Contract Terms Act 1977 provides that, for loss other than death or personal injury, a person cannot exclude or restrict liability for negligence by a contract term or notice except in so far as it satisfies the requirement of reasonableness. The Act applies to non-contractual notices, so the absence of a contract between Vantage and Kestrel is irrelevant. Section 13(1) prevents the Act being sidestepped by wording a notice so that it excludes the duty itself, rather than the liability. The notice therefore cannot automatically prevent a duty arising. For a non-contractual notice, s.11(3) asks whether it is fair and reasonable to allow reliance on it, having regard to all the circumstances when the liability arose. Kestrel is a business, not a consumer, so the Consumer Rights Act 2015 regime for consumer notices does not apply and UCTA governs. Whether Kestrel succeeds will depend on that reasonableness assessment.
Why A is wrong: Section 13(1) means a notice excluding the duty itself is still subject to the reasonableness requirement, so it is not automatically effective.
Why B is wrong: Only liability for death or personal injury resulting from negligence can never be excluded (s.2(1)); other loss is subject to reasonableness.
Why C is wrong: Section 2 expressly applies to notices given to persons generally or to particular persons, not only to contract terms.
Why D is wrong: The Consumer Rights Act 2015 governs consumer notices; Kestrel is a business acting for business purposes, so UCTA applies.
A little more practice done.
Related questions
Excluding liability for negligence in a business contract (Unfair Contract Terms Act 1977 s.2)
Which of the following best describes the effect of clause 9 under the Unfair Contract Terms Act 1977?
Negligent misstatement by a solicitor to the opposite party (Steel v NRAM)
Which of the following best describes whether Hollins LLP owed Northgate a duty of care in respect of the email?
Pure economic loss caused by a negligent act: power cut damages calculation (Spartan Steel)
Applying the leading authority on economic loss caused by a negligent act, how much is Forgewell likely to recover from the contractors?
A GOOD HABIT, DELIVERED
Tomorrow's question.
In your inbox.
One free question a day, with the answer and reasoning.
No course pitches. Just your daily practice.