How to Practically Implement a Pre-Engagement Inspection Agreement

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Informative Note: (This note contains extracts from the copyrighted Report Systems Australia handbook series)

Pre-engagement agreement objective

The objective of a pre-engagement inspection agreement is to ensure that the inspector and their client have a common understanding and expectation of the service to be delivered before delivery of the service actually starts.
Any clause which seeks to limit the liability, responsibility or the scope of the report must be agreed with the client before the inspection is carried out. If the pre-engagement inspection agreement is to be regarded as an integral part of the contract, it must be signed by the client.

In the case of property and timber pest inspections, Australian Standard AS 4349.0-2007 indicates that an inspection agreement shall be entered into prior to the inspection taking place, should be in writing and signed by all parties to the agreement.

However, in the past many inspectors have found it difficult due to time restrictions to meet their pre-inspection obligations. Inspectors can now use a web based service to facilitate the delivery of an inspection agreement. For further information visit www.myreportingapp.com/agreements

If from previous dealings, the client is familiar with the terms and conditions of inspection and report, notice may be deemed to have been given. Accordingly, a copy of the pre-engagement inspection agreement terms should be forwarded and kept on file by the inspector's regular clients such as real estate agents, solicitors and conveyancers. Invoices can be issued which impute those standard terms to the current engagement.

Urgent inspections

In the case of `urgent' jobs for new clients it is not always practical to have a pre-engagement inspection agreement signed before carrying out an inspection and the issue of a report. In such cases, the following procedure (or something similar) may be adopted subject to the inspector's professional indemnity insurer's approval:

  • The inspector verbally informs the client (or the client's authorised agent) at the time of booking the job that the inspection report is subject to the terms and conditions as set out in the inspector's pre-engagement inspection agreement. At this stage, it is important that the client understands and verbally agrees to the scope of inspection and report and has the opportunity to ask for and review the standard terms of engagement.
  • After completing the inspection, when the written report is forwarded to the client, the inspector also includes the pre-engagement inspection agreement. The agreement must be completed, signed and returned by the client with the `agreed fee'.
  • Tax Invoices can be issued which impute the standard terms and conditions of engagement. The terms and conditions can be attached or printed on the reverse side of the invoice. It is important to clearly direct the client to those terms and conditions. The following sample statement can be inserted in a prominent position on the front of the Tax Invoice (preferably in bold text) "By paying the agreed fee, the Client acknowledges that they have read, understand and agree to the terms and conditions of inspection and report set out in this invoice".

Inspectors must note that only those contractual terms brought to notice of the client before the contract is formed can be enforced. Beware of doing jobs on what may become a speculative basis.

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This article is not intended to be advice and you should not rely on it as a substitute for any form of advice. Please contact RSA at (inspector@rsa.net.au) for further information.