Limitation of liability in outsourcing


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Commercial expert
Practice notes

Limitation of liability in outsourcing


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Commercial expert

Practice notes
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This Practice Note identifies and explains key considerations relevant to negotiating and drafting limitation of liability clauses in information technology and business process outsourcing agreements.

It covers the following:

  1. •

    Legal principles

  2. •

    Approaches in outsourcing

  3. •

    Heads of losses

  4. •

    Specific provisions in the agreement

  5. •

    Dealing with data protection liabilities

  6. •

    General considerations

For detailed guidance on the exclusion and limitation of liability in commercial contracts generally, see Practice Note: Exclusion and limitation of liability, and for practical negotiating and drafting guidance, see: Drafting and negotiating a limitation of liability clause—checklist.

For an example limitation of liability clause, see Precedent: Limitation of liability clause.

Legal principles

A contract term which excludes or limits liability is subject to both statutory and common law controls, with the majority of the key statutory restrictions found in the Unfair Contract Terms Act 1977 (UCTA 1977).

The courts are, however, generally reluctant to interfere with commercial deals struck between sophisticated businesses. Some concern arose among suppliers following a number of IT cases in the 1990s in which the courts took

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United Kingdom
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