ABSTRACT

It will very often be the case that a contract will include a clause excluding or limiting the liability of one of the parties in the event of certain types of breach. The exclusion may be total, or may limit the party’s liability to a specified sum of money. There is nothing inherently objectionable about a clause of this kind. Provided that it has been included as a result of a clear voluntary agreement between the parties, it may simply indicate their decision as to where certain risks involved in the transaction should fall. If the contract involves the carriage of goods, for example, it may have been agreed that the owner should be responsible for insuring the goods while in transit. In that situation, it may be perfectly reasonable for the carrier to have very restricted liability for damage to the goods while they are being carried. The inclusion of the clause is simply an example of good contractual planning.1