Limiting Liability Through Contractual Agreement

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					Limiting Liability Through Contractual Agreement
Craig P Ehrlich; Joanne D Williams
The CPA Journal; Dec 2008; 78, 12; Docstoc
				
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Description: Fearing catastrophic jury verdicts for malpractice, many professionals are increasingly using liability-limiting language -- particularly waivers of punitive damages and alternate dispute resolution agreements. The current trend of the law seems increasingly toward allowing professionals to limit their liability through contractual agreement, but several regulatory agencies prohibit their use in certain circumstances. When an accountant is performing ordinary commercial services, such as management consultancy, there is no special concern, and liability-limiting language ought to be routinely enforced. The auditor-client relationship is not a fiduciary one, and the client risks only economic harm, not physical injury or death. If an agreement between an accountant and client turns out to be an arm's-length commercial bargain, it should be enforced as written. The courts hesitate to interfere with the terms of a freely struck bargain, provided that there is meaningful choice to the parties.
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