Professional Liability Flashcards

An architect discovers a design error after construction is complete that increases the client's maintenance costs but poses no safety risk. What is the architect's primary obligation?

Answer: Disclose the error to the client and discuss remedies

Professional ethics require disclosure of known errors to the client so remedies can be discussed, even when safety is not at issue.

Under the doctrine of res ipsa loquitur, a professional may be found negligent when:

Answer: The harm would not ordinarily occur without negligence and the professional had control

Res ipsa loquitur allows negligence to be inferred when the type of harm normally implies negligence and the defendant controlled the instrumentality.

A professional liability policy with a $500,000 per-claim limit and a $1,000,000 aggregate limit faces three claims of $400,000 each in one policy year. What is the maximum the insurer will pay?

Answer: $1,000,000

The aggregate limit caps total payouts across all claims in the policy period; payments stop once $1,000,000 is reached regardless of individual claim amounts.

Which contractual clause most directly limits the professional's total financial exposure to a client in a dispute?

Answer: Limitation of liability clause

A limitation of liability clause caps the maximum amount the professional can owe the client, directly bounding financial exposure.

When a third party (not a client) suffers harm due to a professional's negligent work, the third party may seek recovery under:

Answer: Negligence tort law, if foreseeable harm was caused

Third parties lacking privity of contract may still sue in tort for negligence if the harm to them was reasonably foreseeable.

A professional retains project records for only two years before destroying them. A claim is filed four years after project completion. This record destruction most likely:

Answer: May constitute spoliation of evidence and harm the professional's defense

Destroying records after a potential claim arises or before the statute of limitations expires can constitute spoliation, creating adverse inferences against the professional.

In the context of professional liability, 'consequential damages' refers to:

Answer: Losses flowing indirectly from the breach, such as lost business profits

Consequential damages are indirect losses caused by the breach, such as lost profits or business opportunities, rather than the direct cost of correction.