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E&O: New Florida Law May Limit Individual Liability for Design Professionals

E&O New Florida Law May Limit Individual Liability for Design ProfessionalsStatute Provides Limited Statutory Immunity to Design Professionals

Under a new Florida statute, which is effective July 1, 2013, design professionals in the Sunshine State may contractually limit their individual liability for negligence occurring within the scope of their employment. Design professionals are architects, interior designers, landscape architects, engineers, surveyors or geologists as defined under Florida’s law.

Under prior law, design professionals could be individually liable for damages caused by their professional negligence, even if the business entity they worked for had a contract limiting its liability for negligence. The new statute eliminates this individual liability under the following circumstances.

  1. There is a contract between the claimant and the business entity for the provision of professional services to the claimant.
  2. The contract does not name as a party to the contract the individual employee or agent who will perform the professional services.
  3. The contract explicitly and prominently includes a statement (in uppercase font that is at least 5 point sizes larger than the rest of the text) disclaiming individual liability for negligence.
  4. The business entity maintains any professional liability insurance required under the contract.
  5. Any damages are solely economic in nature and the damages do not extend to personal injuries or property not subject to the contract.

The effect of this legislation is that if a professional services contract complies with the newly enacted statutory requirements, those contracting with design professional entities may not be able to hold the individual professionals liable for their negligence. In addition, the new law also extends the reach of contractual limitations of liability. Existing case law does not allow contracting parties to limit a third-party design professional’s common-law liability for professional negligence. For example, Florida’s Third District Court of Appeals ruled that an individual design professional (Witt vs. La Force Country Club) was not protected by the contractual limitation of liability in the contract between an owner and a design firm. This new law will supersede existing case law. 

It’s important that design professionals in Florida analyze their current contracts and consult with an attorney to meet the specific requirements set forth in the statute in order to take advantage of the new protections and minimize their exposures afforded under the new law.  If the requirements are not followed or if the contract does not track the legislation, individual design professionals presumably will be liable for economic damages resulting from their errors, in addition to the liability of the business itself.

Moreover, anyone involved in a construction project should take care to consider the effect of this new law. Construction professionals evaluating how this new law impacts their business should speak with a qualified construction attorney familiar with project delivery methods, construction contracts, and Florida’s common law, in addition to a professional liability insurance specialist.

Axis Insurance Services, LLC, an Errors & Omissions (E&O) expert, can help you with your specific professional liability needs. Please give us a call at (877) 787-5258.

Sources: Mondaq, Law 360.com

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Blogged on: June 4, 2013 by Mike Smith
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