Mark P. Gergen,
Privity's Shadow: Exculpatory Terms in Extended Forms of Private Ordering, 43
Fla. St. U. L. Rev.
Available at: http://scholarship.law.berkeley.edu/facpubs/2615
This Article addresses a set of important and unsettled legal questions on which there has been scant theoretical scholarship. A few examples suggest the nature, importance, and difficulty of the questions:
Tenant suffers substantial lost income as a result of a careless error by Contractor in renovating a commercial building. A term in Tenant's contract with Owner, who hired Contractor, absolves Owner from liability for the loss. Does the term also absolve Contractor from liability to Tenant? What if the exculpatory term is in the contract between Owner and Contractor?
Buyer overpays for goods as a result of Appraiser's careless error. Seller hired Appraiser. A term in the contract between Buyer and Seller makes the appraisal "final and binding." Does this term bar a claim by Buyer against Appraiser?
Creditor detrimentally relies on Accountant's report in extending credit to Company. Company hired Accountant. A term in Accountant's contract with Company limits the scope of Accountant's duty to investigate accuracy of Company's financial information. Does this term also define the scope of Accountant's duty to Creditor?
A building has a defective foundation as a result of Builder's mistake. Years later, after Owner sells the building to Purchaser, the defect becomes manifest. The contract between Owner and Builder absolves Builder from liability for the defect. Does this term bar a claim by Purchaser against Builder?