In the matter of Barto v. Boardman Home Inspection, Inc. the Ohio Eleventh District Court of Appeals determined that the limitation of liability provision in a home inspection contract was not unconscionable and thereby did not violation the Ohio Consumer Sales Practices Act.
Barto hired Boardman Home Inspection, which is solely owned and operated by David Shevel to perform a home inspection on a home they were purchasing. The parties entered into a written agreement prior to the inspection that included the areas for inspection as well as a limitation of liability clause. The clause limited Boardman’s liability to the amount paid for the inspection and inspection report. After agreeing to the terms, Shevel performed the inspection including a visual inspection on the roof and determined that asphalt shingles were proper for the pitch of the roof. After Barto took possession of the home, the roof leaked because asphalt shingles were not proper for the actual pitch of the roof causing damage to the home.
Barto sued Boardman Home Inspection and David Shevel for negligence and for violations of the Consumer Sales Practices Act. The trial court determined that the limitation of liability clause was not unconscionable and therefore did not violate the Consumer Sales Practices Act. As such, it limited Boardman’s liability to $350.00. The court also determined that Shevel could not be held personally responsible for any negligence as he was clearly identified as an agent for Boardman.
The Court of Appeals affirmed the decision finding that the limitation of liability clause did not violate the Consumer Sales Practice Act. The court looked favorably upon the 9th District’s decision in Green v. Full Service Property Inspections, LLC, 2013-Ohio-4266, which also found that a limitation of liability provision in a home inspection contract did not violate the Consumer Sales Practices Act. In finding that the clause was not unconscionable, the court noted some important factual findings including: that the clause was set off in the agreement in a separate paragraph, that the consumer was not rushed into signing the agreement or prevented from asking questions about it, that the consumer was not prevented from negotiating terms, and that the consumer was not prevented from hiring another inspection company.
A limitation of liability clause can be a powerful tool in any contract. It is a way for the parties to agree upon the amount of damages should any problems arise, allowing the parties to quantify their risk and exposure. Using a rational amount that is logically connected to the underlying transaction along with the factual findings above regarding negotiation and execution of the agreement should allow a party to limit their liability without running afoul of the Consumer Sales Practices Act.
The Full Text of the Opinion May Be Found HERE.