Advice on Engagement Letters for Accountants

Advice on Engagement Letters for Accountants

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Hi All

I am in the process of finalising my Engagement Letters, for which the wording was very helpfuly provided to me however I have a query about the Limitation of Liability section, particularly for the Limitation of Aggregate Liability section, see below for extract of letter:

Limitation of aggregate liability

Where the engagement Letter specifies an aggregate limit of liability, then that sum shall be the maximum aggregate liability of this firm [or company], its partners [directors] agents and employees to all persons to whom the engagement letter is addressed and also any other person that we have agreed with you may rely on our work. By signing the engagement letter you agree that you have given proper consideration to this limit and accept that it is reasonable in all the circumstances. If you do not wish to accept it you should contact us to discuss it before signing the engagement letter.

Although the concept isn't new to me I've never before had to think about an aggregate limit of liability.  Can someone provide me with some further input here, what is an acceptable aggregate limit or if I should include this at all?

Many thanks

Bernice

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By zebaa
02nd Feb 2012 15:59

Write what you like...

You can write what you like. If it comes to Court such terms are neither here nor there and the Court will award what is due in law. It is like the sign in a shop 'NO RETURNS' . If the goods are faulty they are stuffed, sign or no sign.

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By malcolmrichards
02nd Feb 2012 16:16

Hear hear

In my opinion possibly but not necessarily. It will still come under scrutiny in relation to the Unfair Contract Terms Act and whether that applies would be a matter for the courts to decide as several factors are considered and it depends on the individual merits of the case.

Just because you have slipped in "you agree that you have given proper consideration to this limit and accept that it is reasonable in all the circumstances"

wouldn't preclude someone from making such a challenge especially as the person agreeing to the limitation is binding a third party who may not have given their authority for them to do so.

 

 

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