Exculpatory Clauses May Not Be Enforceable
Exculpatory clauses have been the subject of some controversy for many years both in the context of contractual provisions and in the context of personal injury claims. An exculpatory clause seeks to limit the liability of the person or company drafting the clause. The Kentucky Court of Appeals has recently ruled that an exculpatory clause in a contract for home inspection is void on public policy grounds. The Court made several observations in regards to this exculpatory clause:
- if the exculpatory clause were to be validated, then the home inspector would have little incentive to act in a diligent fashion, i.e. if it knew that its liability was simply to giving a refund to the customer even though it had been negligent then that would provide little incentive for the home inspector to in fact be diligent.
- there is no real arms length bargaining between the home inspector and the potential home purchaser.
- if the home inspector held himself out as soliciting this type of work and willing to perform this type of service for the public, then the home inspector should not be allowed to seek insulation from liability based upon an exculpatory clause.
- if the inspector’s carelessness exposed the potential homeowner to a future loss, then that is something that should be subject to some recompense.
- the home inspection business is a business that is potentially suitable for public regulation since it is of great significance to members of the public who deem a home inspection to virtually be a necessity prior to buying a home.
