This Practice Note 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 (UCTA 1977) and the Misrepresentation Act 1967 (MA 1967).
It looks at what types of clauses constitute exemption clauses and the three key issues to consider when drafting such clauses or analysing them in a dispute:
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incorporation
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construction, and
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statutory controls
It also considers the court’s approach to the exclusion or limitation of liability for certain types of breach (eg fundamental breach) and types of loss (eg direct loss, indirect and consequential loss, loss of profits, loss of use and loss of data), some of the common ways in which parties exclude or limit liability (eg financial caps, time bars, excluding rights of set-off) and exemption clauses and third parties.
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Limitation of Liability definition
What does Limitation of Liability mean?
Limitation of liability means a contractual provision to reduce or exclude the types and amounts of liabilities one party may recover from another party relating to default or non-performance in connection with a contract. Such provisions are subject to numerous controls and restrictions imposed by statute and by common law.
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