3121 Exclusion clauses used by professionals to exclude their liability for negligence.

[FONT=Times New Roman][SIZE=3]I’ve stated on previous occasions that I believe there are still gaps in the system and that is why things can and do go pear shaped. The following summary of a Supreme Court ruling should help bring this message home as it highlights the potential problems that can occur, especially when using the [I]scrittura privata autenticata [/I]to complete a sale. [/SIZE][/FONT]

[FONT=Times New Roman][SIZE=3]The case deals with Notarial responsibility to undertake the [I]visure catastali and ipotecarie[/I] during the course of a property transaction and the use of exclusion clauses by professionals to exclude their liability for negligence. [/SIZE][/FONT]

[FONT=Times New Roman][SIZE=3]Bearing in mind that this litigation occurred between Italians, it should serve as a warning to all overseas buyers. No one is infallible and no one is immune to risk. Moreover, is it really worth sacrificing prudence for the sake of expediency, which could otherwise lead to lengthy and expensive post-contract litigation? [/SIZE][/FONT]

[SIZE=3][FONT=Times New Roman][B]Cass. civ., sez. II, 18-01-2002, n. 547 - Pres. Baldassarre V - Rel. Mazziotti Di Celso L - P.M. Russo R (parz. Diff.) - SALCONE c. PEDONE [/B][/FONT][/SIZE]

[SIZE=3][FONT=Times New Roman]During a property transaction, the vendor declared the subject property to be free from encumbrances, but the buyers later discovered a mortgage listed against the property and had to subsequently apply for it to be discharged and also pay an additional sum of money (€ 32.000) in order to avoid repossession.[/FONT][/SIZE]

[SIZE=3][FONT=Times New Roman]The claimants (the buyers) therefore held the Notary, who stipulated the sale by way of [I]scrittura privata autenticata[/I], responsible because she failed to carry out any [I]visure[/I] (searches) to ascertain whether the subject property was free from encumbrances or not. They sought damages, costs and a reimbursement of the fees paid to the Notary. [/FONT][/SIZE]

[SIZE=3][FONT=Times New Roman]The [I]Notaio[/I] in question defended her position by arguing that the allegations were unfounded. Her argument was that she had in fact not failed in her duty because the contracting parties, being in a hurry to conclude the transaction, had expressly approved and accepted the [I]scrittura privata autenticata[/I] that she had notarised, which contained an exclusion clause limiting her liability as far as the searches were concerned. [/FONT][/SIZE]

[SIZE=3][FONT=Times New Roman]The claimants argued that this was in breach of article 1341 of the Civil Code (which covers standard conditions of contract) because the exclusion clause constituted a limitation of responsibilities, something considered being [I]vessatoria[/I] (harmful) and sufficient to render the clause ineffective, especially when they had not specifically approved it in the first place. [/FONT][/SIZE]

[SIZE=3][FONT=Times New Roman]The Court of Appeals, however, rejected these claims on the grounds that the claimants had not only agreed to the [I]scrittura privata [/I](containing the clause that defined the extent of the Notaio’s obligations), but also that the clause was considered, moreover, an integral part of the contract, which the parties chose to accept. [/FONT][/SIZE]

[SIZE=3][FONT=Times New Roman]The claimants also argued that the Court of Appeals had overlooked the fact that, as per article 1176, a professional must perform his/her obligations diligently according to the task being undertaken. The [I]Notaio[/I] in question should have therefore acted in a warning capacity and ensured that the parties fully understood the legal effects of the transaction, as well as ensuring that all doubts were cleared up beforehand. A professional cannot be discharged from their obligations by claiming they are not responsible because the client is negligent. [/FONT][/SIZE]

[FONT=Times New Roman][SIZE=3]The case was eventually taken to the Supreme Court where the judge upheld the decision made by the Court of Appeals, also ruling against the claimants on the grounds that: [/SIZE][/FONT]
[LIST]
[*][FONT=Times New Roman][SIZE=3]There is no burden of responsibility on a Notaio to carry out the [I]visure ipotecarie[/I] where a property transaction is ratified by [I]scrittura privata, [/I]and where there is express agreement by the parties that, for reasons for expediency, the Notary should be excluded from such an obligation.[/SIZE][/FONT]
[*][FONT=Times New Roman][SIZE=3]The clause was legally effective since it was an integral part of the contract and precisely defined the extent of the [I]Notaio’s [/I]obligations with regards to performing the searches. [/SIZE][/FONT]
[*][FONT=Times New Roman][SIZE=3]The exclusion clause could not be invalidated just because the claimants deemed it unreasonable.[/SIZE][/FONT]
[*][FONT=Times New Roman][SIZE=3]The claimants failed to provide evidence to the contrary and so there was no justification for ignoring the exclusion clause in the first place.[/SIZE][/FONT][/LIST][FONT=Times New Roman][SIZE=3]Although rare, there have been other cases involving the admissibility of exclusion clauses limiting a [I]Notaio’s [/I]liability to perform searches. However, the courts seem to hold differing views and a closer examination of the judiciary’s traditional doctrines reveals some interesting approaches as far as rules of interpretation are concerned.[/SIZE][/FONT]

[SIZE=3][FONT=Times New Roman]This example has nothing to do with [I]Notaio[/I] bashing, nor am I saying that the only route is to use a solicitor. Rather, I am trying to reinforce the point that the Italian way of doing things neither constitutes a foolproof guarantee nor a reliable formula and as such, the burden of responsibility should still rest with the buyer to find out as much as possible about the subject property before entering into a legally binding contract. [/FONT][/SIZE]

[COLOR=black][SIZE=3][FONT=Times New Roman]To conclude, I quote from a previous thread: [/FONT][/SIZE][/COLOR]

[I][SIZE=3][FONT=Times New Roman]“The great myth being perpetrated here is that if you use a lawyer you are protected from errors and insured in the event of errors. In UK where solicitors have been given the monopoly of charging for what a notary does elsewhere errors are extremely common and the small print ensures you will get no easy redress. If you do it yourself you do a better job” [/FONT][/SIZE][/I]

[I][SIZE=3][FONT=Times New Roman]“Whatever you think it is much easier to obtain redress through the notary than trying to from the lawyer's professional body.” [/FONT][/SIZE][/I]

[FONT=Times New Roman][SIZE=3]Statements like these may be underpinned by personal and perhaps negative experiences in dealing with lawyers, but I do believe that they are very misleading and demonstrate a lack of real appreciation of the complexities associated with purchasing a property in Italy.[/SIZE][/FONT]

[SIZE=3][FONT=Times New Roman][COLOR=black]Some of you have undoubtedly completed your house purchase without problems, but for those of you who are searching for a dream home in Italy I think it is worth stressing that the use of exclusion clauses to exclude liability for negligence is not uncommon. If they are construed (as they appear to be in Italy) as a something which defines the extent of contractual obligations rather than a defence to a breach of an obligation (which in England is, to some extent, covered by the Unfair Contract Terms Act), they could take away your rights and nullify your expectations [/COLOR]and so my advice is not to rush into things until you are absolutely sure of what you are signing.[/FONT][/SIZE]

Category

Legal

Although I appreciate that you are warning (and quite reasonably) about the limitations of the responsibilities of a notaio, in this case which you are quoting the transaction under discussion is a "scrittura privata", which, (please help here, notaio!) is not the same thing as an "atto di compravendita". The Court clearly held that the notaio had lesser obligations in the case of the scrittura privata.

I think it is highly unlikely that a foreign purchaser would enter into a "scrittura privata", so although your comments are useful, I think they are a little unnecessarily alarmist!

To avoid confusion, above I am referring to a scrittura privata [B]to complete the sale,[/B] which is the situation referred to in Charles' post - and NOT to the compromesso, which is also commonly referred to as a scrittura privata.

[quote=Relaxed]Although I appreciate that you are warning (and quite reasonably) about the limitations of the responsibilities of a notaio, in this case which you are quoting the transaction under discussion is a "scrittura privata", which, (please help here, notaio!) is not the same thing as an "atto di compravendita". The Court clearly held that the notaio had lesser obligations in the case of the scrittura privata.

I think it is highly unlikely that a foreign purchaser would enter into a "scrittura privata", so although your comments are useful, I think they are a little unnecessarily alarmist![/quote]

Sorry Relaxed but I beg to differ. You seem to be making assumptions. The scrittura privata is still used in many property transactions and I know of one Notaio in particular who likes to use them in preference to the atto pubblico. Both are in fact used for completing the purchase and apart from the fact that the scrittura costs less, the main distinction between the two instruments lies in subtle, yet fundamental differences in their probatory capacity.

There is nothing alarmist about my comments. They are based on fact and demonstrate that nothing is sacrosanct. The Notaio in question had limited her liability by using an exclusion clause and not because of the scrittura privata.

Yes - but if the notaio had put such an exclusion clause into an atto which would have to be registered, I would have thought that the registrar would have looked a bit askance?

I must admit I am surprised that the scrittura privata is being used as widely as you suggest, for property transactions.

Charles the decision you quoted states a general principle of responsability for the notary, even if his activity is related to a "scrittura privata autenticata", in other words there's a [B]presumption of responsability[/B]
unless there is an express agreement by the parties to dispense him/her from undertaking visure ipotecarie.
Since there's a general principle, it's the notary that must prove the parties' dispense and this can be justified only for specific reasons: i.e. haste.
This exceptions states an obvious principle: nobody can be considered responsable for not having done an activity that nobody has requested.

Here's the "massima" from Cassazione:
Rientra tra gli obblighi del notaio, che sia richiesto della stipulazione di un contratto di compravendita immobiliare (nella specie, scrittura privata autenticata), lo svolgimento delle attività accessorie e successive necessarie per il conseguimento del risultato voluto dalle parti ed, in particolare, il compimento delle cosiddette "visure" catastali e ipotecarie allo scopo di individuare esattamente il bene e verificarne la libertà, salvo [B]espresso esonero del notaio da tale attività per concorde volontà delle parti, dettata da motivi di urgenza o da altre ragioni[/B].
Sez. II, sent. n. 547 del 18-01-2002, Salcone c. Pedone (rv

I find this quite surprising given the ease with which the notary can consult the land or mortgage registry using the SISTER application to see if there are any formalities entered against a specific property.

Without knowing the details of the case, I think the buyer was ignorant/naive and the insertion of an exclusion clause should have also been accompanied by a note explicitly highlighting the potential risks. In fact the services of a lawyer would have been more appropriate.

To my mind, such a ruling would make more sense for embedded burdens/encumbrances that are not clearly registered thus requiring a more in-depth search using both technical and legal competencies. One example that springs to mind are the unpaid green taxes for deruralising farmhouses.

A similar example would be that of pre-emption rights where the vendor states that nobody is interested in the land and declares accordingly. Should the notary ask for a copy of the registered letters as evidence or simply warn the buyer of the consequences?

BTW the use of scrittura privata autenticata is quite common in Tuscany for completions.

David
[url]www.tuscanydoc.com[/url]

I think it is highly unlikely that a foreign purchaser would enter into a "scrittura privata", so although your comments are useful, I think they are a little unnecessarily alarmist!

Our agent insisted we purchased with a scrittura privata and when we insisted that it had to be an Atto, the agent tried to tell us that this was an old law not used anymore! Believe me there are many sales that go through scrittura privata because so many buyers don't even realise there are two different ways it can be done.

[FONT=Arial]It is always a matter of [/FONT][FONT=Arial][I]salvo espressa dispensa per concorde volontà delle parti[/I] of course, but these things do happen. The use of exclusion clauses are not uncommon and people need to be aware. No system is completely faultless. [/FONT]
[FONT=Arial]. [/FONT]
[FONT=Arial]The point here is that complication and confusion are the smokescreens of Italian life. The claimants in this case were perhaps a little ignorant and I can't figure out how they let such a thing happen because the v[/FONT][FONT=Arial]endor must provide following guarantees:[/FONT]

[FONT=Arial]a) [/FONT][FONT=Arial]guarantees against eviction (to protect buyers from loss, in whole or in part, of their right of ownership because of third party claims against the property)[/FONT]

[FONT=Arial]b) [/FONT][FONT=Arial]guarantees against defects, which may render the property unfit for use (article 1490 Italian Civil Code) and reduce its value in a significant way. This guarantee cannot be claimed if the buyer was made aware of any defects, or if such defects were easily identifiable. The vendor is, however, excluded from limited duty of disclosure where he/she acts in bad faith and fails to disclose any defects.[/FONT]

[FONT=Arial]c)[/FONT][FONT=Arial] guarantees against the failure to provide what is otherwise considered to be an essential characteristic of the property being promised for sale (article 1497 Italian Civil Code refers). The buyer has the right to rescind the contract for non-performance according to article 1453 of the Italian Civil Code, providing that the absence of such characteristics adversely affects the property.[/FONT]