Limitation of liability provision in contract holds up
The S.C. Supreme Court upheld the limitation of liability clause in a home inspector’s contract ,which limited his liability to $475 (the cost of the services rendered). The court found that the clause was not unconscionable and that there was a correlation between the amount charged for the service and the liability that the home inspector was willing to undertake.
The following considerations were taken into account by the court in its ruling:
- The home buyer was an educated woman who was knowledgeable about the industry since she was a real estate agent.
- The home buyer read the contract which included the provision and she actively shopped other providers.
- Limitation of liability clauses allow service providers to offer services at a lower cost ,which results in greater affordability.
- Courts in other states found similar clauses in home inspection contracts to be enforceable and not unconscionable.
However, courts in other jurisdictions have also reached the opposite conclusion, especially in states with laws requiring home inspectors to carry General Liability and Professional Liability policies.
This S.C. Supreme Court ruling in Gladden v. Boykin will likely use the same reasoning when deciding the unconscionability issue in other types of contracts such as arbitration and indemnification.