Beware helping your friends – you might be sued!

Professional services provided free of charge, where there is no contract, can give rise to a duty of care and claim for damages.

Beware helping your friends – you might be sued!

This might not be the best way to end a friendship, especially where the offer started out as generous favour to you, but needs must!  This can apply across many sectors: A lawyer helping a friend during her divorce, an accountant signing off accounts to an architect designing her mates house.

The Court of Appeal in the case of Lejonvarn v Burgess has agreed that a married a couple may sue their friend, a professional architect, who provided them with free architectural and project management services as a gift.

The couple, decided to landscape their garden but were put off by a quote (c. £150,000) from an established landscape gardener. They turned to their friend and an ex-neighbour for her professional assistance. She secured a contractor, project managed the works and provided design input. It did not go well. The held her responsible for significant issues arising as they were forced to engage the contractor they first approached to carry out remedial works and finish the project, at a substantially higher cost than the original quote.

Notwithstanding there being:

  1. No contract
  2. She was not formally engaged in her professional capacity or through her firm
  3. No payments had been made
  4. That the parties had been friends

The ruling found that the services were provided in a professional context – as such ‘akin to contract’ – and it was expected and they relied upon her to perform her duties properly. The architect was therefore taken to have assumed responsibility and in these circumstances it was fair, just and reasonable to impose a duty of care. A duty established her former friends are now free to sue her for damages, estimated at £265,000.

The decision, which appears harsh on the face of it, is confirmation and serves as a stark reminder to professionals that just because you do not charge for your services does not necessarily mean you escape liability should things go awry.

So, next time offering a friend a favour think twice! Get the correct paperwork in place, so insurance covers you, your engaged formally on clear terms even if you are not charging.

Practical tips

Business and pleasure can be a dangerous mix, and is something most will try to avoid. However, there will be situations when you, as both a friend and a professional, are called upon for a favour and you, despite your best intentions, say “yes”. So how do you approach it to protect yourself?

As ever, context is everything. Speaking with a friend over drinks giving general advice and pointers is not likely to give rise to any duty. On the other hand, in carrying out works to someone’s house or providing specific professional advice, as you would at work, you will be taken to have assumed responsibility for the matter and a duty of care may arise.

It’s a little like a pre-nup, you want to be together forever, but at the same time protect yourself just in case.  This means having a conversation, with your friend, at the outset about your involvement and setting this out in a contract. As we can see above, the absence of a contract does not preclude a duty of care. Of course, you will have contracts in place with your clients, which provide you with protection, so why not with a friend – the services and scope for something to go wrong are just the same. That way you can also bring in the protection of your professional indemnity insurance.

Insurance is a very important consideration. If carrying out work in your capacity as an individual (as opposed to on behalf of your company) you are unlikely to be covered. This needs to be checked before doing anything that may result in your personal liability.

As for the terms of your contract, regardless of whom you are performing services for, it is important to check that these provide you with adequate protection (for example limitation of liability) and that appropriate mechanisms are in place to help resolve a dispute should one arise. Often we recommend mediation or arbitration is suggested before a costly court case. This would also potentially enable you to preserve a friendship maybe!!

With the cost of litigation rising, there is an ever increasing emphasis on taking measures to prevent ending up in court. Clarity of contractual terms is essential and there are other steps, such as a dispute resolution clause, that may also help avoid steep legal costs.

Karen Holden is the founder of A City Law Firm

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