This past week I reviewed several contracts that all had one thing in common: each one required the design professional to “warrant” that it had “thoroughly familiarized itself with the local conditions under which the Services required under this Agreement are to be performed.” The first problem with this provision is the obligation to provide a warranty. Express warranties and guarantees establish liability even though no proof of negligence is required. Under U. S. common law, design professionals have the responsibility of using due care in providing their services. There is no warranty of the efficacy of professional services, nor does the design professional provide a warranty for the work of the contractor or others based on the services or instruments of service provided by the design professional. Courts have not extended the duty to provide a guarantee to design professionals because they provide services based on judgment and expertise; a design professional is applying its professional skills and reasoning on a unique set of facts for each project.
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 does not “stretch” to provide coverage for a warranty of services beyond meeting the standard of care.
Another significant problem with this provision is the definition of the word “familiar.” “Familiar” is defined by Webster’s to mean “closely intimate” or “well known.” It is doubtful that even the most diligent design professional would possess intimate knowledge of the project site and such local conditions at the time the owner-design professional agreement is executed. Absolute assurances can impose liability on a design professional even though services were performed in accordance with normal professional skill and care, and in spite of the fact that the requirements may be subject to various and possibly contradictory interpretations.