Smith v Eric S Bush
A surveyor's disclaimer of liability to a house buyer is subject to the Unfair Contract Terms Act and may be unreasonable.
Facts
Mrs Smith applied to the Abbey National building society for a mortgage to buy a modest house. The building society instructed Eric S Bush, surveyors, to value the house, and Mrs Smith paid the fee. She was given a copy of the report, which contained a disclaimer stating that neither the building society nor the surveyor accepted responsibility for the valuation and advising her to get her own survey. Relying on the report, she bought the house without an independent survey. The surveyor had negligently failed to notice that chimney breasts had been removed without proper support, and the chimneys later collapsed.
Legal principle
The House of Lords held that the surveyor owed Mrs Smith a duty of care in negligence and could not rely on the disclaimer. The disclaimer was a notice purporting to exclude liability for negligence, so it was subject to section 2(2) of the Unfair Contract Terms Act 1977 and had to satisfy the requirement of reasonableness in section 11. It was unreasonable, because the surveyor knew that buyers of modest houses usually relied on the valuation, the buyer could not realistically negotiate the terms, a valuation of this kind involved only a basic level of skill, and the surveyor could insure against the risk. The case also shows that the Act applies to non-contractual notices.
Related cases on exclusion clauses and unfair terms
- Canada Steamship Lines Ltd v The King [1952] AC 192
- Chapelton v Barry Urban District Council [1940] 1 KB 532
- Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805
- Director General of Fair Trading v First National Bank plc [2001] UKHL 52, [2002] 1 AC 481
- George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803
- Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371
- Hollier v Rambler Motors (AMC) Ltd [1972] 2 QB 71
- Hopcraft v Close Brothers Ltd [2025] UKSC 33
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