Insights for In-house Counsel Autumn 2023 - Contracts

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Limiting liability: single global cap or multiple caps?

The recent decision in Drax v Wipro (2023) demonstrates the potential for disputes around liability caps. It also highlights the pros and cons of different approaches to caps, such as having:

a single global limitation of liability for all claims; or
multiple caps for different types of loss, different incidents or different years of the contract.

The dispute centred around whether a particular clause gave rise to a single liability cap that limited the claimant's recovery to £11.6 million in damages – or whether, as the claimant argued, it provided multiple caps for each individual claim, which would have allowed the claimant to recover over £130 million.

Our briefing looks at the lessons to be learned from this case – and in particular, some of the drafting pitfalls to be aware of when structuring limitations of liability, whether you opt for single or multiple caps. We also look at an earlier Court of Appeal case involving a similar dispute over whether a contract was intended to provide for single or multiple liability caps.

"Best prices" or "most favoured customer" clauses

Imposing an obligation on another business to offer the best prices and terms that it offers to all other customers can often seem attractive – but such clauses are not always straightforward. Our briefing explores some of the difficulties and the key points to consider for both customers and suppliers when negotiating such clauses.

Outsourcing Spotlight

Our new publication, Outsourcing Spotlight, includes coverage of the following:

the impact of AI on outsourcing
pricing issues in the current high inflation environment
changes to the UK's regimes for data protection and cybersecurity
proposed reforms to UK employment law, including TUPE.

Audit clauses and Paddington Bear: key lessons from case law

Audit clauses can be a useful tool for verifying compliance with contractual obligations, especially on compliance, pricing and payment issues. But what are the key drafting considerations?

Our briefing considers the common lessons to be learned from a recent dispute relating to the worldwide exploitation of Paddington Bear merchandise (Pixdene v Paddington and Company) and an older case (from 2012) relating to a dispute over a multi-million pound tram system (Transport for Greater Manchester v Thales).

Cost plus and open book pricing: what to watch out for

In an environment where costs are increasingly unpredictable and escalating, pricing mechanisms based on cost plus a margin may seem an attractive option, at least for suppliers. But as we explain in our briefing, there are a number of pitfalls for the unwary – and it is vital to build in appropriate contractual protections.

Loss of profit exclusions and breach of exclusivity

Many commercial contracts contain blanket exclusions of loss of profits – and sometimes the parties also agree that such clauses will be mutual (so both supplier and customer benefit from the same exclusion). But as we explain in our briefing, a recent dispute between EE and Virgin Mobile highlights the significant impact such provisions can have on a party's remedies for breach – especially where the clause is reciprocal. The judgment also contains some important lessons about exclusivity obligations.

Read Richard Brown Profile