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Sam Varela | Reviewing another professional's work can have liability ramifications

Sam Varela | Reviewing another professional's work can have liability ramifications
19-10-22 / Sam Varela

Sam Varela | Reviewing another professional's work can have liability ramifications

Many professionals do not realise the liability that may ensue, when they undertake to review another consultants work or designs for a particular authority or client on a project, which may include errors or faults.

What is of utmost importance is that a consultant could very well be held delictually liable for any loss or damage suffered by a third-party, which is negligently caused by said Consultant whilst rendering their professional services, explains Sam Varela, Senior Legal Risk Advisor at Aon South Africa.

"Consultants who set out to conduct and carry out surveys, draft reports or even undertake to check calculations, among others, will unfortunately in all likelihood be placed in the category of possible defendants should a lawsuit ensue and could even be sued by third parties who are not in a direct contractual relationship with them," she adds.

Delictual Liability vs Contractual Liability

Delictual liability is considered to have arisen when one party negligently causes losses or damages to someone else or their property and hinges on the following elements being proven: conduct, wrongfulness, fault, causation, and damage. In order for a party to be held delictually liable, all five of these elements must be proven. An example of how a party can be held delictually liable would be If someone crashes their car through your wall because they were neglecting to watch the road or talking on their phone, they would be liable for damages to your property based on delictual liability.

Contractual liability on the other hand is centred around a breach of the specific terms of a contract that a professional has in place with a client/ authority. If one of the parties to the agreement breaches a condition in the contract which causes a loss to the other party, then there may be contractual liability to the party suffering the damages. 

"In terms of the common law as well as most standard forms of agreements, a professional consultant is obliged to 'exercise reasonable skill, care and diligence' with regards to work undertaken. It is important that there is no ambiguity in the instructions accepted by a consultant. This can be achieved by clarifying - in writing precisely what the instruction entails and the parameters or Terms of Reference (TOR). It is also important to notify the requesting authority or client of items which have not been checked when the final reports on drawings and calculations are made, for example, the capacity of existing foundations to accommodate additional load," says Sam.

As with any professional relationship, well-defined and concise communication in addition to a clearly documented process will help to negate any uncertainty during or after the provision of services to a client or authority. "It is important for both parties to remain on the same page when it comes to what was required or expected by the client or authority and what was delivered or intended to be delivered," Sam explains. 

Professional Indemnity insurance

In the event of a third party suffering a loss and pursuing the option to sue a consultant for damages, the consultant's Professional Indemnity (PI) insurance should respond to such a claim, subject to the terms and conditions of the policy.

"Professional indemnity insurance (subject to the terms and conditions of the policy) is designed to protect the likes of architects, engineers, attorneys, brokers, doctors, estate agents – essentially any professional individual or practice/, essentially a professional providing a professional service. Professional Indemnity cover protects you for damages that may be claimed by clients or third parties arising out of an act, omission or breach of professional duty in the course of the provision of your professional services It may  also covers the ever-escalating legal costs associated with defending such a claim," Sam explains.

It is possible for delictual damages to be greater than contractual damages, for the simple reason that a consultant cannot limit the extent of delictual damages that he/she may be liable for to a third party. "A consultant is able to contractually limit liability towards a client to twice the professional fees, for example, but in the event of a delictual claim, the damages suffered and claimed for by a third party would not be subject to the agreed limitation of liability. This is due to the fact that the third party was not a signatory to the contract concluded and is therefore not bound by its terms and conditions," Sam explains.

While it is harder to prove a claim in delict and to evidence the existence of a duty of care, the possibility of a delictual claim being made remains a reality.

Professional Indemnity insurance should respond to an allegation of professional negligence.

If the allegation is that the insured signed off on an incorrect design then there is the possibility that this may in fact be deemed to be an allegation of negligence and the policy may respond subject to the other terms and conditions of the policy.

However, the liability in this scenario would most likely sit with the original designer. The insureds policy should initially respond to defend the insured on this basis.

It is crucial to speak to an expert broker in the field of professional liability in order to have a clear understanding of the risks you may be faced with in such a scenario and what the best options would be to pursue to mitigate and manage the potential for such risk," Sam concludes. 

*Sam Varela is Senior Legal Risk Advisor at Aon South Africa.

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