Chain! Contracts and the Land Surveyor

By Deward “Karl” Bowles, RPLS

Not so long ago a firm handshake or a phone call were how business was conducted. The reputation of your firm was riding on your ability to fulfill the obligations of the verbal agreements you made with your clients. The quality of your service and product were judged by your ability to stand by the verbal contracts you made.

Those days are long past as society has become increasingly complex and increasingly litigious. I will be primarily writing about Texas but generally there have been recent attempts at tort reform across the country that have led to a number of changes in codified law which in turn have generated case law. One of the ways to defend against alleged negligence, error or omission on the part of the Land Surveyor is by using contract law. There is an absolute necessity in using a written contract for any agreement to perform a Land Survey in the current environment we find ourselves in. Further such a contract should be structured in a way that manages liability in a prudent manner. This protects both the Land Surveyor and the Public. This also helps inform the Public about what a Land Surveyor is and what a Land Survey is.

Privity of Contract has been used to defend against alleged negligence, error or omission on the part of the Land Surveyor. The Land Surveyor should address the contract and the product to only specific parties. This can help limit liability to only specific parties in the contract. If someone claims negligence, error or omission, who is not a party to the contract, their action is generally limited to others. Texas courts have long held that the Economic Loss Rule bars claims for economic damages, when there is no accompanying claim for personal injury and/or property damages. It is difficult to prove personal injury or property damage resulting from a Land Survey, particularly if you are a third party.

This type of legal theory can be countered with an argument based on the “Deceptive Trade Practices Act” and/or the “Second Restatement of Torts” but Privity of Contract places a heavy burden on a third party plaintiff. Negligence, error or omission can only violate a contractual duty but if it causes damage beyond the contract this can be problematic for the Land Surveyor. It has been held by the Court that professionals have a legal duty outside the contract not to damage the public. Losses of a pecuniary nature have been held to be indistinguishable from economic losses. Texas case law is still evolving on this issue so stay tuned.

Incorporating particular requirements for the service and product in a contract can be useful in combating claims centering around what the product should include, what form the deliverables should take and even how the product should be delivered. Using a provision that states a particular “manual of practice” or a specific set of specifications will be followed to produce the Land Survey is extremely helpful in countering claims of negligence, error or omission.

Not only professional liability but matters of general liability can be addressed through written contract. An example would be to add a provision to the contract that states “Tree limbs, bushes and leaves may be cut in the course of performing the survey, Land Surveyor assumes no liability for resulting damage.” Not only does this reduce liability but it discloses to the client what to expect to happen in the course of the Land Survey being executed.

It is important to understand that provisions of a contract that violate law are unenforceable and null. For example adding a provision to a contract to perform a Land Survey that violates the Texas Administrative Code has no effect on the contract. Such a provision does not prevent claims of negligence, error or omission by other parties as a result of violating the Texas Administrative Code in the course of fulfilling that specific provision of the contract.

It may surprise you to know that certain provisions of a contract limiting the liability to the amount of the fee of a Land Survey have been upheld. The Courts are extremely liberal when it comes to upholding what the contract can stipulate. However the appearance of offering only an “Adhesion Contract” must be avoided. Disclosure and providing opportunity to negotiate are necessary to make a contract enforceable. A simple blank box on the contract with the heading “Clients Additional Instructions” for the potential client to fill in when they agree to it and a line in the contract that states the terms and conditions of contract are negotiable before it is executed helps combat this type claim.

Specific disclaimers in a contract can reduce the potential for claims of negligence, error or omission. For example a provision can be added to the contract stating the Land Surveyor is not responsible for approval or submission of the product to third parties. This avoids later claims by third parties that the product is negligent, in error or contains omissions. If the product meets the specific standard spelled out in the contract (and meets the State codified minimum standard) then the third party has no claim. This also helps combat claims by third parties before they ever occur because the third parties are not privy to the terms of the contract and therefore have no basis to judge the Land Surveyor’s product (beyond the State codified minimum standards).

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Readings:

http://wahly.com/rpls/CookConsultants4thCase.pdf

http://www.leagle.com/xmlResult.aspx?xmldoc=In%20AZCO%2020081103041...

http://www.supreme.courts.state.tx.us/ebriefs/09/09022323.pdf

http://www.supreme.courts.state.tx.us/ebriefs/09/09022311.pdf

http://www.cbylaw.com/filebin/files/cokinos/gmc-economic_loss.pdf

http://www.krcl.net/index.php?src=gendocs&ref=Litigation-Alert%...

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Come ahead!

This Content Originally Published to Land Surveyors United Network

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Subject Tags: Adhesion, Contracts, Deceptive, Error, Land, Law, Liability, Negligence, Omission, Surveyor, More…Texas, Tort, Trade, industry, surveying

Say Something ⇣

Reply by Scott D. Warner, R.L.S. on April 2, 2012 at 7:51pm

Deward, as usual, we are on the same page.  Keep it coming!

Reply by Deward Karl Bowles on April 1, 2012 at 10:59pm

I am flattered by your comments Scott.

It is often easy to think this type of thing does not matter and may cost you clients but the reality is if a potential client will not review and sign a written contract then that is a client you do not need.

The sign of a good business and a good professional is a good contract. Your clients WILL come to appreciate it because it protects both you and them in the long run. 

 

Reply by Scott D. Warner, R.L.S. on April 1, 2012 at 3:29pm

Deward, the advice you share is some of the best in the industry.  Get to know the needs of your client, provide an accurate cost estimate, and put it all in a written contract.  It sounds so simple, but simply not always followed from phone to finish.

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