Legal Liability Exclusion Clause

Commercial contracts usually contain force majeure clauses that release the parties from any liability in the event of an unforeseeable event making performance impossible. These clauses may, in practice, have the same effect as exclusion clauses and be subject to the suitability test provided for in Article 3 of the UCTA. Although force majeure clauses are generally considered appropriate, they can cause problems if they are exceptionally broad to cover issues such as increased costs or events that may be within the control of the parties. A “general” exclusion which, unlike mere limitations, prevents claims for damages even in cases of gross negligence, is not automatically ineffective. However, the broader the exclusion, the clearer the wording must be for it to be effective.21 However, whenever it is commercially acceptable, parties may consider limiting liability rather than attempting to exclude it completely, as a reasonable limit of liability is more likely to be maintained than a general exclusion.22 In other jurisdictions, you may exclude liability for negligence. However, it must be explicit and the customer or consumer must have clearly consented to it. It is common to see clauses that accept liability for limited types of loss or damage, but attempt to exclude or limit liability for “indirect”, “consequential” and/or “economic” losses. “Indirect” and “consequential” losses are widely accepted as the same thing, i.e. losses falling under the second part of Hadley -v- Baxendale (1854) 9 Ex. 341. According to this second part, only damage which can reasonably be assumed to have been taken into account by both parties at the time of the conclusion of the contract can be compensated.24 Only the nature of the damage must have been taken into account at that time, and not the amount of the damage. unless the clause (in any event) meets the suitability test. The answer is that limitation of liability clauses are generally considered acceptable by the courts, while disclaimers are not.

If a party signs a contract that contains an exclusion clause, it is bound by its terms. This applies even if that party has not read or understood the document. Note that a signed document may be marked as partially or completely invalid if you or the other party make a false statement. However, with respect to U.S. jurisprudence, the landmark Markborough v. The 1991 Superior Court ruled that limitation of liability clauses are legal as long as the client has had a reasonable opportunity to review the clause. If the contract is not signed, the clause can be included by termination. This means that the person attempting to invoke the clause (for example, the website owner) must have taken reasonable steps to bring it to the customer`s attention. Overall, the exclusion should not be too broad.

A narrower, more realistic clause is more likely to be upheld by a court. Even if the wording of a clause is ambiguous and the standard approach to construction does not give a clear answer, it can be interpreted as “contra proferentem”. This means that the court interprets the clause strictly and interprets any ambiguity against the party who wishes to invoke it. However, “contra proferentem” rules play a very limited role with regard to commercial contracts negotiated between parties with equal bargaining power (Persimmon Homes Ltd –v- Ove Arup & Partners Ltd3). Any contractual provision that attempts to exclude or limit liability for pre-contractual misrepresentation or to limit the remedies available for misrepresentation will be void unless it satisfies UCTA`s reasonableness requirement. The Google Store example, on the other hand, was not bold or highlighted, but very clear and written in plain language. If you write your clause in capital letters, be sure to break it down into short, easy-to-read paragraphs and simple sentences so you don`t confuse your customers. Indemnification clauses can be fairly easy to incorporate into a contract, but they are sometimes difficult to enforce in court. Under the Consumer Rights Act 2015 (CRA), a clause in a consumer contract that limits or excludes liability is not binding unless it can be described as fair. Similarly, under the Unfair Contract Terms Act 1977 (UCTA), liability in business-to-business contracts can only be limited or excluded if the term is just and reasonable. You can see that in this example from Google, no dollar cap is specified.