Cases - Smith v Eric S Bush

Record details

Smith v Eric S Bush
1 AC 831
Estate agency - Negligence in valuations and surveys - Unfair Contract Terms Act 1977

In 1980, a firm of valuers was instructed by a building society to inspect and report on a modest house which was being purchased for £18,000. The valuers were held liable to the purchaser for negligently failing to discover that the chimneys had been left unsupported following the removal of the chimney breasts. In this case the purchaser, who required a mortgage of approximately 20% of the purchase price, was shown a copy of the valuer's report. The House of Lords regarded the imposition of a duty of care to the purchaser as fair and reasonable, given that the valuer's fee for a mortgage valuation would normally come directly or indirectly out of the purchaser's pocket.

The valuation was negligent, so the borrower, having relied on the report, sued for damages. The firm relied on a disclaimer of responsibility which had been signed by the borrower, but the House of Lords held that this disclaimer failed the test of reasonableness under the Unfair Contract Terms Act 1977.

In coming to this conclusion, the House of Lords emphasised that the case concerned property at the lower end of the housing market, and suggested that a mortgage valuer might well not owe a duty of care to a purchaser of very expensive residential property, nor to one acquiring commercial property. Such purchasers, it was suggested, might well be expected to protect their own interests through taking relevant professional advice.