Legal English Challenge 2024 – Day 12

Read the short text about limitation of liability and exclusion of liability clauses, then select the correct option from the list to complete (1) ….. to (10) ….. .

 Limitation of liability and exclusion of liability clauses are often used in contracts to ___1___ risks and define the parties’ rights and responsibilities.

 Limitation of liability clauses are contractual provisions that define the extent to which a party’s liability is restricted or ___2___ in the event of certain specified events or breaches. The scope of liability is subject to limitation, in other words it has to be clearly stipulted whether the limitation of liability extends to direct, indirect, consequential or incidental damage, to specific categories of losses, breaches of contract, (gross) ___3____ , claims brought by third parties, indemnity obligations, or other specified events. Certain types of damage or losses may be ___4___ excluded from the cap. The maximum amount or cap on liability can be a fixed monetary amount, a percentage of the contract value, or another agreed-upon measure. Usually there are ___5___ requirements that the parties must follow in the event of a claim or breach triggering the limitation of liability.

 Exclusion of liability clauses are contractual provisions that seek to limit, exclude, or modify the liability of one or more parties to a contract for certain specified events, types of losses, or circumstances. Exclusion clauses identify specific categories of damage, losses, responsibilities or other specified ___6___, such as indirect, consequential, special and incidental damage, lost profits and business ___7___. The courts may scrutinize exclusion clauses to ensure that they are fair, reasonable, and not___8___ to public policy. Exclusion clauses that are ___9___ unfair or overly broad may be subject to challenge.

 While limitation and exclusion of liability clauses are generally ___10___, courts may closely scrutinize such clauses, especially if they are deemed one-sided, unconscionable, or against public policy. The enforceability of these clauses may be strengthened if there is a clear bargained-for exchange, where the parties have freely negotiated and agreed upon the terms, and each party has received something of value in return.

Now, press the START button to select the correct option from the list to complete (1) ….. to (10) ….. .