Limitation of Liability

 

When a business enters into a contract, in addition to the written terms of the contract certain terms are also implied by law such as terms relating to satisfactory quality (in the case of the sale of goods) or reasonable care and skill (in the case of the supply of services).

With the additional potential liability that this brings it is important to ensure you sensibly limit your business’ exposure to risk.

It is not possible to exclude liability for death or personal injury caused by negligence, or liability for fraud or fraudulent misrepresentation and an attempt to do so will be invalid. In terms of other liability, however, it depends on whether you are dealing with consumers or on a B2B basis.

Consumer

When dealing with consumers, limitation of liability is more complicated. You cannot limit your liability for damages where goods (inc. paid for digital content) are defective, incorrectly described or incorrectly installed, or where services are not provided with reasonable care and skill or within a reasonable time (assuming a timescale has not been agreed).

It is possible, however, to limit your business’ liability for breaches of consumer contracts where such losses are not reasonably foreseeable.

Consumer protection is a tricky area and we will blog about this separately.

B2B

When excluding or limiting liability it must be reasonable to do so. Whether an exclusion or limitation is reasonable or not will depend on the circumstances.

It may be more reasonable to exclude or limit your liability if –

  • You are not in a dominant bargaining position so are not seen to have imposed your terms on the buyer – this might apply if there are other providers available to the buyer
  • You have drawn the buyer’s attention to any exclusion or limitation rather than trying to hide it
  • The terms are standard in the industry

If you have negotiated terms then any exclusion or limitation is likely to be more reasonable than had you simply put forward your standard terms.

 

2020 Business Law can help with your contracts to ensure that any provisions can be relied on. Just give us a call or email info@2020businesslaw.co.uk