Smith v Eric S Bush [1990]

Smith v Eric S Bush [1990] UKHL 1 is a significant case in English tort law and contract law, heard by the House of Lords. The case dealt with two main issues: the existence of a duty of care in tort for negligent misstatements and the reasonableness of a term excluding liability under the Unfair Contract Terms Act 1977 (UCTA).

A surveyor, Eric Bush, employed by Abbey National, was tasked with inspecting and valuing a property in Norwich for a purchaser, Mrs Smith. The valuation incorrectly stated that no essential repairs were needed. Mrs Smith relied on this information and purchased the house. Subsequently, significant damage occurred due to collapsed chimney bricks. Mrs Smith argued for a duty of care in tort and challenged the exclusion clause under UCTA 1977.

Mrs Smith claimed that there was a duty of care in tort to exercise care in making statements, and she also challenged the reasonableness of the clause excluding liability under UCTA 1977. The case was joined with another appeal, Harris v Wyre Forest District Council, where a similar issue arose regarding a disclaimer by a council in a property valuation.

The House of Lords held that it was not unreasonable for a purchaser, particularly in the case of a modest house, to rely on the surveyor's evaluation. This decision extended the concept of Hedley Byrne liability to proximate third parties, emphasising the common practice of relying on surveyors' evaluations in property transactions.

Regarding the UCTA 1977, the Lords clarified that the Act regulated exclusion notices that would provide a defence to an action for negligence. The court applied a but-for test under Section 13 of the Act, assessing whether a duty of care would exist but for the exclusion. The Lords concluded that, in the context of a private citizen making one of the most expensive purchases in their lifetime, it was more reasonable for a professional surveyor to bear the risk of liability. However, they acknowledged that not all exclusion clauses used by surveyors would be deemed unreasonable, citing instances such as large property developments.

Smith v Eric S Bush is noteworthy for its impact on the extension of liability to third parties in tort law and the application of reasonableness tests under UCTA 1977. The decision emphasised the importance of considering the reasonableness of exclusion clauses in specific contexts and acknowledged that such clauses might be acceptable in certain situations, contributing to the ongoing development of negligence and contract law in the United Kingdom.
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