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Limitation of Liabilty in Non Audit Engagement Letters

I am wondering to what extent limitation of liabilty clauses are used in practice for non-audit engagement letters? I would be grateful for input from anyone using these clauses. How have you determined  the amount of the limit ? I assume the use of such clauses and the basis of amount needs agreeing with PI insurers? Any problems there? How well has the limitation been received by clients, existing and new? Many thanks.

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By Hansa
14th May 2012 12:11

I do.

I'm not sure how useful they are in terms of trying to limit liability if negligent.  The main reason I put in a £1,000 limit was to get rid of people potentially  "trying it on" when claiming the result of whatever they were advised didn't work out (usually precisely because they didn't follow the advice, or did so selectively).

In fact no one has ever claimed or tried to (or indeed commented on the limit).  If we know we did something wrong we would not charge the client (or repair the situation free of charge).

 

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avatar
14th May 2012 12:31

The rule of thumb

used to be ten times the fee charged for a piece of work, which made life easier for the templates....

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14th May 2012 14:21

I don't put a limit in my engagement letters, partly because i don't want clients to see it as a green light to claim up to £x and partly because it would give me a false sense of security if the limit were invalidated by s2 Unfair Contract Terms Act 1977.

But I have insurance cover for £2m which means I can sleep soundly!

RM

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