6. Product liability versus standard of care liability

Product liability versus standard of care liability

Manufacturers, designers and sellers of physical products are subject to what can be referred to as product liability claims. Normally the liability is strict liability, meaning that, if the product is found to be dangerous, each person or entity in the chain of manufacture and distribution is held under the law to be liable for any damages regardless of any other considerations.
Service providers, where no physical product is involved, are subject to a standard of care liability. Under a standard of care liability, there is no strict liability. It is not enough to prove that the service was defective. You must prove that the service provider was negligent to an extent that they fail to meet the standard of care applicable to the situation in which the service was provided.

Problems with the concept of standard of care

The problems with the concept of a standard of care begin with the definition. In essence, any professional has a duty to provide a service that is consistent with what is called the Standard of Care.  

The following is a paraphrase of Wikipedia says about the term Standard of Care.

In certain industries and professions, the standard of care is determined by the standard that would be exercised by the reasonably prudent professional in that line of work. The standard of care is important because it determines the level of negligence required to state a valid cause of action.

Clearly, the definition assumes that there is some objective meaning to the concept of a “reasonably prudent professional.” How exactly does one discover the standard that would be exercised by a reasonably prudent professional in a specific situation? The key word here is “discover.”

Note also that the standard of care “determines the level of negligence required to state a valid cause of action.” It is important to understand that under this standard you are not required to produce a report that is free of error. Some level of negligence. The bad news is that it is impossible for you to know ahead of time what the standard of care is. Legally it is whatever a jury says it is.    

Why the TREC SOP will be used as a standard of care

Because of the expense of actually discovering the applicable Standard of Care, what happens in almost every case is that the TREC SOP will be used as a Standard of Care. Bear in mind that, while it is true that the TREC SOP does play an important role in determining in the applicable Standard of Care, it is not the whole of the applicable Standard of Care. Different inspectors interpret the TREC SOP differently and apply it to specific situations differently.              

The importance of staying within your Standards of Practice

I agree with attorney Joe Ferry that you are better off complying with and staying within the TREC SOP. If there is a reason why you cannot comply, you are better off stating that reason in the report than having to explain later.

If you go beyond the TREC SOP, you run the risk of opening up an unnecessary line of attack for a plaintiff attorney.

There may be situations where it is appropriate to go beyond the TREC SOP so you have to decide this on a case by case basis.    

The biggest Standard Of Care mistake that I see far too often

Note that in the TREC SOP you are required to report your opinion of how the foundation is performing and also to report the foundation as deficient under some specified circumstances. What you are not required to do is recommend repair or not recommend repair.

In my opinion, raising the repair question is problematical at best. Here are the problems as I see it:

  • If you answer yes, you probably have no liability to the buyer, but to the seller that is a totally different issue. I can tell you from personal experience that many sellers violently object to this. The Engineering Practice Act specifies acts which fall within the jurisdiction of the practice of engineering. As long as you stay within your SOP, you have no problem with the Engineering Practice Act. One place where you can get into a problem is recommending foundation repair when the house is in an expansive soil area.
  • Some TREC inspectors not only recommend repair, they even specify how many piles or piers are needed and where they should be placed. In other words, the include a repair design. TREC inspectors who do this are not on thin ice, they are in the middle of a frozen lake in ice cold water that is 50 feet deep.
  • So what about the situation where you do not recommend foundation repair? If you do not address the issue of foundation repair, you should not have a problem with the engineering practice act, but you may have opened yourself up to liability to your client. Let’s say that 6 months after closing, the buyer notices some new drywall cracks. Next, you get a demand letter from an attorney claiming you failed to report the need for repair. Your attorney says the repair question is outside the TREC SOP and therefore not part of the SOC. The buyer’s attorney subpoenas every report you made for six months before the inspection and six months after. In that stack of reports they find where you  not only recommended repair, you also provided a repair design. At this point, you are in deep legal trouble. The sad part is that none of this is necessary.

My advice is to fulfill the TREC SOP and do not go beyond it.

Print Friendly, PDF & Email