10 SNOW HILL | LONDON | EC1A 2AL Liability in Commercial Contracts Overview of English law and practice Richard Brown, Travers Smith LLP Industrijurist gruppen Kvitfjell, 8 March 2013

Liability in Commercial Contracts 1 What we will cover Context Limiting liability – the basics under English law Caps on liability Excluded losses Indemnities Common problem areas with liability clauses

Liability in Commercial Contracts 2 Context What contracts are we talking about? Categories –Limits on liability –Exclusions of liability –Indemnities Court’s approach Importance of getting drafting right

Liability in Commercial Contracts 3 Limiting liability – the basics under English law What liability cannot be excluded or limited? –Death/personal injury caused by negligence –Fraud

Liability in Commercial Contracts 4 Limiting liability – the basics under English law Unfair Contract Terms Act Consumers Deliberate/wilful breach

Liability in Commercial Contracts 5 Caps on liability “What level should we accept?” Structure –Aggregate –Annual –Per claim Relevance of term Value of contract Insurance  Common drafting issue “The maximum aggregate liability of each Party under this Agreement shall be limited to the charges payable by the Customer in the 12 months immediately preceding the matter or circumstance giving rise to the claim.”

Liability in Commercial Contracts 6 Caps on liability What is an unreasonably low cap? Bargaining power / sophistication of parties

Liability in Commercial Contracts 7 Caps on liability What should fall outside cap? –Fees –Confidentiality –IP infringement –Data protection –TUPE –Service credits/liquidated damages

Liability in Commercial Contracts 8 Excluded losses Loss of profit – really? Consequential, special and indirect loss – what is it?

Liability in Commercial Contracts 9 Excluded losses Loss of data  Common drafting issue “Neither party shall be liable to the other Party under this Agreement for any indirect or consequential loss or damage (including loss of profits, revenue or business).”

Liability in Commercial Contracts 10 Indemnities Rationale and benefit Unreasonable indemnity clauses Absence of other restrictions on indemnities Recovery of third party loss?

Liability in Commercial Contracts 11 Price refund is the only remedy: reasonable? Shortening limitation periods – reasonable? How short can you go? Non reliance provisions Common problem areas with liability clauses

Liability in Commercial Contracts 12 Conclusion Reluctance of court intervention Importance of clear drafting Courts will look to enforce provisions as drafted, unless clearly contrary to business common sense But need to adopt reasonable approach to liability provisions in context of contract as a whole

Liability in Commercial Contracts 13 Profile Richard Brown Commercial, IP & Technology, Travers Smith Richard trained at Travers Smith and became a partner in the firm’s Commercial, IP and Technology Department in Richard specialises in advising large UK and international businesses on key contractual, joint venture and outsourcing arrangements and his clients include household names in the media, sport, leisure, utilities and support service sectors. Richard’s recent work has included advising: Channel 4, on the launch of Channel 4 HD on Freeview and its other DTT carriage arrangements Sahara Force India Formula One racing team, on its technical partnerships with McLaren and Mercedes-Benz YouView, on its contractual arrangements in advance of the launch of its new linear and on demand TV platform Exponent on its acquisition of the BBC Magazines business from BBC Worldwide Firstsource on Barclays Bank´s outsourcing to it of the Barclaycard credit card and payment businesses and Eircom´s customer services function talkSPORT on its global radio licensing partnerships Macquarie Bank on a series of investments in, and outsourcings relating to, its utility metering business International Energy Group on its gas and electricity infrastructure partnerships Trainline.com on its ticket retail arrangements with train operating companies and other transport operators Richard is named as a key individual in the Chambers legal directory and his practice is highlighted in the Legal 500 where clients comment that he is "a good person to have in your corner" and ''when something is very important and we need a good result, we pick up the phone and talk to Richard.'' Richard is also a founding member of the firm´s Anti-Bribery Group, advising businesses across the world on the impact of the UK Bribery Act.