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Re: Limit of Liability

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Jeff Smith wrote:
> This topic should of course be addressed to my attorney, but I am
> interested in the opinions of other engineers.  If you were bored with the
> "fee" topic ( which I liked, BTW), then hit the "delete"  key now.
> If my client has an attorney review my contract, 99.99 % of the time they
> will not accept a limit of liability clause, no matter how small the job. I
> have had some agree to a LOL = policy limits. I think that some of the
> clients that sign this clause, do not know what it means.  I currently have
> a proposal for a job that I am thinking of walking away from unless I get
> some sort of LOL clause signed. I understand that LOL is not holding up in
> court recently anyway. The same attorney also wants to omit any reference
> to the Construction Industry Rules of the American Arbitration Association.
> (Maybe he has not had much luck with the AAA  :^))
> If anyone has any thoughts on this please reply to the list or email me
> directly.
> Regards,
> Jeff Smith. S.E.
> phone: (415) 543-8651
> fax: (415) 543-8679
> email: smthengr(--nospam--at)
> Smith Engineering
> 27 South Park
> San Francisco, CA 94107
I've had similar discussions with clients, attys and my E&O broker. The
concensus has been that LOL is not enforcable but it is also not
practical ($) to sue an engineer for more than his/her policy limits.
Therefore, the probability is that, if the damages exceed the engineer's
policy limit, attys on both sides will more than likely settle for the
policy limit. I've also been told (by an atty) that this would be true
for both sole proprietors as well as corps. It does make sense that the
policy limit exceed the engineer's personal assets. In other words, if
the engineer had $100k policy limit and had $500k in personal assets,
then the plaintiff may want to go to court. If the engineer had $500k
policy limit and $200k in assets, then the attys would probably settle
for the policy limits.