Beware their clause

Wolves in sheep's clothing. That's what they are. And, as a consultant, you could find a pack of them lurking in your contract of appointment. I am talking about those apparently innocuous clauses that mask something more sinister. Take the following clause, which very commonly features in consultants' appointments: "No act, failure to act, consent or acceptance by the client shall diminish or reduce the liability of the consultant under this agreement".

Now this may appear perfectly reasonable at first sight. After all, the client is rarely an expert in the consultant's field, and, even if it were, why should it not be able to put itself entirely in the consultant's hands? "That's what I'm employing you for!" is the common cry of the employer. The client's understandable concern is that the consultant will try to deny liability for anything and everything that has passed under the client's nose: "I showed you my drawings. You said they looked okay to you. That's the end of it!" It is hard to imagine many professionals worthy of the name presenting such a defence, but presumably they are lurking out there somewhere, because clients and their lawyers seem to live in continual fear of them. Hence, the clause.

On the other hand, where a client is part author of his own misfortune, the inequity of the clause can come crashing down on the consultant. Say, for example, a client employs an architect for a refurbishment. Client provides consultant with some inaccurate information in respect of the building. As intended, the architect relies on that information, which, it turns out, is riddled with errors – some of which should be obvious. However, it negligently fails to spot them and compounds the problem through its own negligent design. The resulting loss is therefore a combination of the client's and the consultant's faults.

At this point, we need to launch into a rather complex legal area, but I promise to keep it as simple and as painless as possible. The principle of "contributory negligence" is, broadly speaking, the reduction of the claimant's claim against the defendant to the extent that the claimant helped bring about his own loss. Contributory negligence is usually something associated with liabilities in tort – those that stem from negligence and that exist independently of a contract. However, contributory negligence can apply to a contractual liability too, provided a parallel liability is owed in tort.

So, in the circumstances I have outlined, the consultant would and should have the opportunity to claim contributory negligence if the client were also at fault. However, the clause that I cited at the outset would, of course, prevent such a proper application of contributory negligence. In view of this, fair-minded clients and their lawyers will often accept a qualification of the clause to the effect that it shall not prevent the consultant raising a plea of contributory negligence against the client.

Now some canny consultants try to introduce into their contracts a clause extinguishing any duties that may exist in tort, stating that the contract is deemed to override all other rights. That may seem like something of a coup for the consultant, but of course, once the tortious liabilities are eliminated, there can be no duty in tort that is parallel to the contractual obligations. As we have seen above, this means the consultant could lose its chance to raise contributory negligence in response to a claim under the contract. An easy trap to fall into, and one of the consultant's own making.

We see, then, that contracts can be deceptively onerous, that a defence in negligence can sometimes, rather confusingly, be applicable to contract too, and that restricting claims against you can work to limit the scope of your own defences. If you go away with just one message, let it be this. If your professional liability insurer will not examine your contractual liabilities closely before you enter into your contract, make sure you appoint a good lawyer who will. Those wolves in sheep's clothing could give you a nasty bite.