Frequently Asked Questions

What is Professional Liability?

In the provision of their services the professional causes their client to suffer loss, the client can sue for compensation. This is what is meant by the term ‘professional liability’.

A discussion of what constitutes a professional or a professional activity can either be very straightforward or complicated. Typically this involves intellectual activity, or manual activity controlled by the intellectual skill of the operator.These services are offered to the public, often for reward, and would require some level of Professional standards of competence, training and ethics. Professionals may have some form of official accreditation provided by a government or industry Association deemed a responsible body able to provide assessment, training and quality monitoring.

What can go wrong for a professional?

Commonly a breach of contract or duty of care whereby somebody has suffered some form of economic or personal loss allegedly linked to the action of the professional.

Negligence by a professional is a breach of duty of care

Most relevant to the professional is the tort of negligence. Negligence involves the breach of a duty of care owed by the professional to the client or, in certain circumstances, to third parties. The standard of care and skill expected is that of an ordinary professional exercising and professing to have the special skill of your particular profession. If however, you hold yourself out as a particular expert, you will be judged by a higher and more onerous standard and not by the standard of the ordinary practitioner in your profession.

The professional must also comply with government regulations

The professional person also has to comply with statutory duties. One example is the Trade Practices Act and the Territory Fair Trading Acts which forbid misleading and deceptive conduct, whether innocent or intentional.

The professional can even be liable to third parties, being persons with whom the professional has not dealt and cannot identify. In some circumstances the professional can owe a duty of care to exercise skill and judgement in issuing information or advice which the professional knows, or ought to know will be relied upon by third parties. This duty extends to the failure to give advice.

Professional indemnity insurance is a convenient and cost effective means for the professional to protect themselves against liability to pay legal costs or damages arising from a breach of contract, or from a breach of professional duty, or from acts, errors or omissions in the conduct of their professional business.

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