Express warranties and guarantees establish liability even though no proof of negligence is required. Under US common law, a design firm has the responsibility to use due care in providing services. There is no warranty of the efficacy of professional services, nor does a design firm provide a warranty for the work of the contractor or others based on the services or instruments of service created by the design firm. Courts have not extended the duty to provide a guarantee to design firms because they provide services based on judgment and expertise.
On every project, a design firm is applying professional skills and reasoning on a unique set of facts. Professional liability insurance policies exclude coverage for claims arising out of express warranties or guarantees. Because coverage is for professional services provided, and not assumed contractual obligations, professional liability insurance cannot be expanded to provide coverage for a guarantee of a specific result or a warranty of services beyond meeting the standard of care.
Clients should understand why guarantee language is inappropriate for professional services contracts and is not in the client’s best interests. The reasoning against such express warranties or guarantees includes the following:
- A guarantee of services is not realistic or effective.
- The legal standard applied to all professionals, including design professionals, is one of negligence and not warranty.
- The cost of such a contractual commitment, reflected in the fees for the services to compensate for the risks assumed, will be a significant and non-productive expense to the client.
- Such contractual commitments are not within the coverage of professional liability insurance.
The words “warrant” or “guarantee” mean to “ensure” or “confirm” that a standard has been met absolutely. Warranties, although inappropriate for the services provided by any professional, might seem attractive to clients since the breach of a warranty provision is much easier to establish than negligence in the performance and furnishing of design services. It is impractical for a design firm to provide either a warranty of services or a guarantee of a result of its services. Because such a contractual commitment is different from the normal standard of care to perform in a non-negligent manner, professional liability insurance specifically excludes coverage for express warranties or guarantees.
It is an established legal principle that a design firm’s services do not imply or warrant a satisfactory result. As one court has stated:
Because of the inescapable possibility of error which inheres in these services, the law has traditionally required less than perfect results, but rather the exercise of that skill and judgment which can be reasonably expected from similarly situated professionals.