When Contract Liability Exclusion Clauses Go Too Far
By Iain Campbell (September 20, 2017, 1:05 PM EDT) -- No doubt in light of the current focus on building safety, many parties with property interests will be reviewing their contractual exposure and asking themselves to what extent they may be accountable to third parties for downstream risks. One way of contractors/subcontractors limiting liability is through the use of exclusion clauses in any contract. This article examines two recent cases involving the interpretation of such clauses, which make interesting reading — particularly for institutions which may be seeking to claim back costs relating to poorly installed materials or unsafe systems. Importantly, the approach taken in these recent cases supports the position that the issue is one of allocation of risk as between the parties and it is a matter for commercial negotiation how contracting parties allocate risks between themselves and ultimately who is responsible to insure against that risk. Price (and the ability to obtain insurance cover) will obviously play a part in determining which party is prepared to accept liability for things going wrong but it is clear that freedom of contract prevails and parties can not necessarily rely on the courts to intervene to save them....
Law360 is on it, so you are, too.
A Law360 subscription puts you at the center of fast-moving legal issues, trends and developments so you can act with speed and confidence. Over 200 articles are published daily across more than 60 topics, industries, practice areas and jurisdictions.