ICAEW BL · Chapter 5 · Question 7 of 10
An accountant gives a lender a reference about a borrower's finances, stating that it is given 'without responsibility'. The reference is negligent and the lender suffers loss. How is the disclaimer likely to be treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It is effective only if it satisfies the reasonableness test in the Unfair Contract Terms Act 1977
Explanation
Hedley Byrne itself shows that a disclaimer can prevent a duty of care arising. However, UCTA 1977 applies to notices excluding liability for negligence, and such a disclaimer must satisfy the reasonableness test (Smith v Eric S Bush). Professionals are allowed to limit liability, subject to that test. A signature is not required for a notice to be considered.
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