Defining your liability in advance: Liquidated damages, limitation and exclusion clauses

Parties to commercial contracts commonly seek to set some parameters around what will happen in the event of a breach. They may for example agree a fixed sum that is payable on breach, or set a maximum sum for any damages, or exclude liability (or particular categories of liability) altogether.

Such clauses may not always have the effect the parties expect, either because of how they are interpreted by the courts or because they are held to be unenforceable as a result of statute or common law principles.

In this sixth of our series of contract disputes practical guides, James Baily, David Nitek and Gillian Fairfield consider the main types of clause that may be used and the extent to which they will (or will not) be effective, and provide some practical tips for commercial parties. You can click here to download the PDF guide.

Clients and contacts of the firm can also register to access the archived version of our webinar exploring these issues by contacting Jane Webber. The webinar lasts an hour and qualifies for one CPD point. Or if you would prefer a shorter version focusing on key practical tips, James has also presented this 10 minute podcast.

There are five previous editions in the series, listed below, which can be accessed from the home page for our contract disputes series (which is also linked under "our guides" in the top menu):

• When do you have a binding contract? It may be more (or less) often than you think
• What does your contract mean? How the courts interpret contracts
• Pre-contractual statements: When can they come back to bite you?
• How far can you act in your own self-interest? The role of good faith in commercial contracts
• Endeavours obligations: How hard do you have to try?