Legal Case Summary
Smith v Eric S Bush [1990] 1 AC 831
Reasonableness of exemption clauses for surveyor reports
Facts
The Defendant, Eric Bush was a surveyor who was employed by Abbey National to assess the value of a property which was to be purchased by the Claimant, Mrs Smith. Mrs Smith had paid Abbey National for Mr Bush’s work to be carried out. Mr Bush’s report stated that the property was not in need of any essential repairs. This was not correct, as it turned out that the property had suffered structural damage. The Claimant bought the property in reliance on this report but eventually part of the chimney collapsed and broke through the roof into the property’s loft. The Claimant and the Defendant did not have a contract between themselves (there was only a relationship between Abbey National and each of the Claimant and the Defendant). What is more, the contract between Abbey National and the Claimant included an exemption clause which specifically exempted the Defendant from liability for his report. The Claimant argued both in contract and tort; first that the exemption clause was unreasonable for the purposes of sections 2(2) and 13(1) of the Unfair Contract Terms Act 1977 and second that there was that the Defendant owed the Claimant a duty of care in tort.
Issues
The issues in this case were three: first, whether there was a duty to exercise reasonable care and skill incumbent on the valuer in tort; second, whether the exemption clause in the contract falls under the Unfair Contract Terms Act 1977 and third, whether relying on that exemption clause is fair and reasonable for the purposes of the Act.
Decision / Outcome
The court held that the exemption clause was unreasonable for the purposes of the Unfair Contract Terms Act 1977. It was of particular note that this was a low value property to be used as dwelling and that it was common practice for purchasers to rely on valuations in making such decisions. Where the property is to be an investment or to be used as a business or whether it was of higher value, an exemption clause of this nature could be reasonable.
Updated 20 March 2026
This case summary remains legally accurate. Smith v Eric S Bush [1990] 1 AC 831 is still good law and the core principles it established — that a surveyor may owe a duty of care in tort to a purchaser who relies on a mortgage valuation report, and that an exemption clause purporting to exclude that liability may be unreasonable under the Unfair Contract Terms Act 1977 — remain authoritative.
One development worth noting for readers: the Unfair Contract Terms Act 1977 continues to apply to business-to-consumer contracts in the relevant context here, but readers should be aware that, for many consumer contracts, the Consumer Rights Act 2015 now governs fairness of terms. The 2015 Act did not repeal or replace the 1977 Act in its entirety — the 1977 Act still applies to business-to-business contracts and to certain other situations — but students should ensure they consider which regime applies on the facts of any given problem question. The facts of Smith v Eric S Bush itself would fall to be analysed under the 1977 Act, as the article correctly states. The case’s broader negligence analysis remains consistent with the Caparo three-stage test and the line of cases on assumption of responsibility following Hedley Byrne v Heller [1964] AC 465.
