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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Vikram, an actuary, provides advice to a small trust under terms stating 'liability limited to Rs 10 lakh'. Considering the Actuaries' Code and professional duties, which approach is most appropriate when relying on such a clause?

The appropriate approach is to bring the clause clearly to the client's attention before engagement and still perform the work with proper skill and care. A liability cap affects the amount recoverable, not the actuary's professional duties under the Actuaries' Code.

  1. AHide the clause in the schedule so that clients rarely query it
  2. BAssume the clause removes any duty to take reasonable care in the work
  3. CDraw the clause to the client's attention clearly before engagement, while still carrying out the work with due skill and careCorrect
  4. DRemove all professional standards for work covered by the cap
  5. Rely on the clause only after a claim is made

Explanation

A limitation clause governs the extent of financial liability but does not remove professional duties of competence and care. Clear communication before engagement supports both incorporation of the term and the Code's emphasis on integrity and communication. Concealing it or treating it as lifting standards is improper.

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