0370 270 6000

Limiting contractual liability; beware of conflicting insurance provisions

10 August 2012

In a case which considered the provisions of the Unfair Contract Terms Act 1977 a project manager, who was sued for losses arising on a delayed project has been prevented from relying on a liability cap, due to the substantial insurance cover that was also provided for in the contract.

The liability cap imposed was less than the contract price of £200,000; yet the contract also required the project manager to take out professional indemnity insurance with a limit of £10 million. As a professional consultant inevitably passes on the cost of its insurance cover to the client in assessing its fees, and as no explanation was provided for the discrepancy between the limitation of liability and the insurance cover available, the limit was found to be unreasonable.

This decision should be borne in mind when seeking to challenge the validity of a cap on liability of another party, or when drafting onerous caps on liability when your client also holds substantial insurance cover.

Related opinions

Are you investing enough in omni-channel retailing and branch IT?

Zynstra, a specialist IT solutions provider, has published a white paper which looks at branch IT solutions for retailers.

View blog

App Providers Respond to ASA Rulings on Freemium apps

Over the last 24 hours the App Store has responded to ASA rulings on misleading ads by making apps that were previously offered as ‘free to play’ now accessible via a ‘get’ option.

View blog

Advertising Standards Agency Ruling May Hit App Industry Hard

The ASA has ruled that an email advertising the Electronic Arts Ltd app ‘Dungeon Keeper’ as free was misleading.

View blog

Cyber-attacks on the rise - are you prepared?

A report published today by the Home Affairs Select Committee highlights the increasing number of cyber-attacks made on UK Businesses and Government.

View blog

Mailing list sign up

Select which mailings you would like to receive from us.

Sign up