Exclusion and Limitation of Liability

Goodwill hunting

An example of loose drafting of a warranty liability exclusion clause in a share purchase agreement

A remotely interesting case

This 2020 Privy Council case was about the basis on which you work out how far you can go when working out for what kinds of losses you can claim damages when there is a breach of contract, before they have to be treated as irrecoverable because they are too remote.

Can’t claim damages because of a limitation of liability clause? Thought about trying for an injunction instead?

June 2015 Under normal contract law, if a party to a contract is in breach, the other party can ask a court to order the naughty party to compensate it for the loss it suffered as a result of the breach. It is common in contracts for parties to exclude and limit their liability for breaches. (For a fascinating article I have written about exclusion and limitation of liability clauses click here). They generally try to exclude liability for indirect losses and loss of profits (click here for another article I have written about this). And they try to limit the amount of liability, for example to the amount they have insurance cover for, or even the amount they have been paid under the contract. Normal contract law is based on ‘common law’. But there is a different kind of law – the law of equity...

The importance of well-worded exclusion clauses

Dec 2014 The law relating to exclusion and limitation of liability clauses is quite difficult. Many people (including many good lawyers I have known) have been confused by it. One area which causes confusion is that the law says that there are two broad categories of loss which you can seek to recover as damages for breach of contract – direct and indirect losses. But some types of loss, eg physical damage, loss of profit, economic loss, and loss of reputation and goodwill, are capable of falling into either category. Broadly, direct losses are those which are the direct and natural consequences of a breach. Indirect losses (also known as consequential losses) are those that do not arise naturally in the course of events, but are still contemplated by the parties at the time the contract is entered into because of the particular circumstances. This recent case is an example of confused drafting (or possibly of a party trying to wangle a different result from clear drafting…)...

The importance of having well-worded exclusions and limitations of liability in your contracts: recent case

Oct 2013 This case is a good reminder of the usefulness and effectiveness of having well-worded exclusions and limitations of liability in your contracts. It also flags the point that it is perfectly possible and acceptable in contracts for supply of goods or services to set out time limitations on bringing claims under contracts. (Such time limitations are very common in the context of business sales, but are seen less often in other contracts.)...