Definition

Terms of appointment are the written agreement setting out scope, fees, responsibilities, liability, complaints procedure and governing law for a specific instruction. The RICS Rules of Conduct require regulated firms to agree written terms before or at commencement. Checking compliance means verifying that terms do not contradict RICS obligations, do not exclude mandatory protections, and do not create conflicts of interest or inappropriate liability limitations.

Why this matters for Ethics, Rules of Conduct & Professionalism

  • Rule 3 (Service) requires work to be carried out to professional standard; starting without clear written terms risks misunderstandings about scope and liability.
  • RICS-regulated firms must have a complaints handling procedure and refer clients to a redress scheme; these must appear in the terms of appointment.
  • Terms must align with the firm's PI insurance; accepting obligations outside the policy scope creates an uninsured risk.
  • Non-compliant terms expose the firm to RICS regulatory action and civil claims. APC assessors test whether candidates can identify problematic clauses.

Key principles

What compliant terms must include

Terms must state: the scope and nature of the service; the fee or fee basis; the complaints handling procedure; the redress scheme membership (such as the Property Redress Scheme or The Property Ombudsman, where applicable); and applicable law. For consumer clients, terms must comply with the Consumer Rights Act 2015, requiring plain language and prohibiting unfair terms.

Limitation of liability clauses

Liability caps are legitimate in principle but must comply with the Unfair Contract Terms Act 1977 (business clients) and the Consumer Rights Act 2015 (consumers): any limitation must be reasonable. RICS guidance discourages caps so low as to be meaningless relative to the instruction value. A clause purporting to exclude liability for negligence or fraud is void.

Conflict checking before accepting terms

Before agreeing terms, run a conflict check under the RICS Conflicts of Interest global professional statement (2017). Search the client and matter database for existing relationships with adverse parties. If a conflict is identified, either decline the instruction or obtain informed written consent from all affected parties, subject to any information barrier requirements.

When terms need to be updated

Terms may become non-compliant if scope changes significantly, RICS issues new mandatory requirements, or the firm's PI insurance terms change. Scope variations must be confirmed in writing and the terms formally amended. Relying on oral variations is a common source of disputes and disciplinary referrals.

Relevant RICS guidance and legislation

  • RICS Rules of Conduct (effective 2 February 2022) — Rule 3 (Service) and Rule 5 (Responsibility) require firms to agree clear terms and act in clients' best interests.
  • RICS Conflicts of Interest global professional statement (1st edition, 2017, effective 1 January 2018) — governs conflict checking before accepting instructions.
  • Consumer Rights Act 2015 — applies to terms with consumers; requires plain language and prohibits unfair terms.
  • Unfair Contract Terms Act 1977 — applies to business-to-business terms; subjects limitation clauses to a reasonableness test.
  • Supply of Goods and Services Act 1982 — implies terms of reasonable care and skill and reasonable price where not expressly agreed.

Ethics and Rules of Conduct angle

Rule 3 (Service) requires clear, prompt service; deliberately opaque terms, onerous small print, or unreasonably low liability caps undermine it. Rule 1 (Honesty and Integrity) requires terms to be transparent about fees and scope and not to create a misleading impression of the service. A candidate who can identify a problematic clause and explain the required amendment demonstrates both technical competence and ethical awareness.

APC-style Q&As

Q (Level 1)What must RICS-regulated firms include in their written terms of appointment?

At minimum: the scope and nature of the service; the fee or fee basis; the firm's complaints handling procedure; details of the redress scheme; and the applicable law. For consumer clients, terms must comply with the Consumer Rights Act 2015 and be written in plain language.

Q (Level 1)What legislation governs limitation of liability clauses in terms of appointment for business clients?

The Unfair Contract Terms Act 1977 applies to business-to-business contracts and subjects any clause limiting liability for negligence to a reasonableness test. For consumer clients, the Consumer Rights Act 2015 applies, which requires terms to be fair and transparent.

Q (Level 2)A client proposes terms that cap your firm's liability at the value of the fee. How do you respond?

A liability cap set at fee value may be unreasonably low relative to the financial impact of the instruction. Under the Unfair Contract Terms Act 1977, such a cap must satisfy a reasonableness test. I would advise the client that the cap must be proportionate to the risk and consistent with our PI cover, and I would not accept terms that create an uninsured gap or that could be challenged as unreasonable in court.

Q (Level 2)How do you check whether proposed terms of appointment create a conflict of interest?

Before accepting any new instruction, I run a conflict search using the new client's name, the counterparty's name and the property address. If a potential conflict is identified, I classify it as an own-interest, party, or confidential information conflict, applying the RICS Conflicts of Interest global professional statement. I would either decline or, where permissible, seek informed written consent from all affected parties after erecting an information barrier.

Q (Level 3)Midway through a commercial lease advisory instruction, the client's solicitor sends a variation expanding your scope to include rent review arbitration work. Your original terms did not cover arbitration services. What do you do?

I confirm that arbitration work falls within my competence and PI insurance cover. I then draft a formal variation setting out the expanded scope, additional fee, any revised liability limitation, and confirmation that the complaints procedure applies. I send the variation to the client for written agreement before commencing the new work. Proceeding without updated terms would leave the firm potentially uninsured and the scope disputed, contrary to Rule 3 (Service) and Rule 5 (Responsibility).