Canada’s major environmental consulting firms typically insist that their clients agree to extremely one-sided terms of service. Under these “Terms and conditions”, appended in fine print to the back of most proposals, the consultants severely limit their liability for negligence to their client, while imposing enormous liabilities in return. In one typical example, the client must agree to cap any future claim for damages against the consultant at $25,000 or $50,000, regardless of how much the consultant’s negligence may actually cost the client. The client must also bring any lawsuit within one year, a time limit that typically expires before the client finds out about the consultant’s negligence. Thus, the client must give up most of its normal contractual rights against the consultant. In return, the consultant insists that the client give it a permanent, unlimited indemnity for any losses the consultant may suffer, whether or not the client was negligent.
The net effect of these grossly unfair terms is that the client bears virtually all the risk of anything that may happen on the site, no matter how negligent is the consultant. The consultants get away with these terms, partly because most clients don’t read them, and partly because the major banks insist on clients using a small number of firms, all of whom have similar unfair contracts. Professional Engineers Ontario, the professional regulator for engineers who is supposed to protect the public interest, seems to have no objections to these contracts. Those who plan to retain environmental consultants should beware.
{ 2 comments… read them below or add one }
I enjoy reading your comments, and I think that you made some good points in this entry. I realize that your example refers to very biassed Terms and Conditions that are developed by consultants to suit their own interests. But I thought you might enjoy the possibilities afforded by looking at this particular blog entry as a marketing strategy. Consider the following (tongue planted firmly in cheek) –
1) Over twenty years ago, the legal profession began to inform property owners about the potential liabilities associated with environmentally contaminated property. Some law firms did good business, helpfully assisting owners pursue polluters – as well as pursuing consultants that had provided advice on contaminated land.
2) Subsequently, lawyers began narrating lawsuit horror stories to environmental consultants, describing their successful prosecutions.
3) The effect of this information was additional business for the legal community, as consulting firms with sufficient finances hired lawyers to assist in writing protective Terms & Conditions.
4) By 2009, most consultants likely have some form of Terms & Conditions in place and the market for that work has dried to a trickle. The wheel has turned, and we now see advice to property owners once again, this time suggesting that they be wary of those Terms – presumably legal advice is available to assist in interpretation and negotiation of better conditions!
It's a little reminiscent of a time in the early twentieth century when news agencies not only reported on the news, but actually assisted in making the news…
Of course, I know that you're referring to egregious and unfair Terms, and no, I don't really believe in conspiracy theories. Thanks for the enjoyable read!
Doug Ritcey
Let me get this straight…a lawyer is advising consultants to increase their potential for liability? Any guess as to how the consultants' lawyers would respond to that?
I wouldn't be adverse to some sort of an agreement wherein a consultant's liability was limited only to the maximum of their insurance, if we could get some assurance we couldn't be named as a 3rd party in some lawyer's future lawsuit. In the projects completed thus far in my career, the only lawsuits have been as a 3rd party. In other words, somebody else on the project team screwed up, but a lawyer will throw up mud on everybody and see who it sticks to. So although we did nothing wrong, we get to spend thousands of dollars on legal bills and lost professional time. Is that fair?
As with any agreement for professional services, the client should beware of the contract language. In addition to the limited liability clause discussed by Dianne, make sure you also get proof of the consultant's insurance. Many one-man-band consultants have no insurance at all.