Limitation of liability

This subtopic considers the following key areas relating to the exclusion and limitation of liability:

Exclusion and limitation of liability

Exclusion and limitation of liability clauses offer the commercial lawyer an opportunity to manage their client’s risk under the contract. Such clauses are heavily negotiated in most contracts and in the spotlight if things go wrong. The legislation which regulates clauses of this type is complex and the law impacting their interpretation is nuanced. An in-depth understanding of the background law is essential when negotiating exclusion and limitation of liability clauses. Clear and precise drafting is also key to a strong exclusion and limitation of liability clause.

A contract term which excludes or limits liability is subject to both statutory and common law controls. The Practice Note: Exclusion and limitation of liability considers exclusion and limitation of liability in business-to-business (B2B) contracts. It provides guidance on the common law and statutory controls affecting exclusion and limitation of liability clauses (also known as limitation of liability clauses, limitation clauses, exclusion of liability clauses, exclusion clauses and exemption clauses), including the provisions of the Unfair Contract Terms Act 1977 (

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Bank permitted to sell safety deposit box items as involuntary bailee (Credit Agricole Corporate and Investment Bank v Persons with an Immediate Right to Possess Goods)

Commercial analysis: This was a case relating to items in 14 safety deposit boxes (SDBs) held at a London bank. Due to the passage of time, the Bank was no longer able to trace the owners of those items, which it now wished to sell. In relation to those goods which had been deposited after 1 January 1978, the court confirmed that these could be sold under sections 12–13 of the Torts (Interference of Goods) Act 1977 (T(IG)A 1977). In respect of goods deposited prior to that date, and which remained subject to general common law, the court was persuaded that the Bank could rely on the principle established in the case of Da Rocha-Afodu: namely, that given that it had done all that was right and reasonable to trace and notify the owners, it should be protected from any potential liability which might otherwise attach as a consequence of the sale. Written by Natasha King, barrister at 4 Pump Court.

Court of Appeal implies term as to price of additional product under sale of goods contract (KSY Juice Blends UK Limited v Citrosuco GmbH)

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