Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Limitation of Liability definition

What does Limitation of Liability mean? In legal practice, a limitation of liability is a contract clause that allocates risk by capping, excluding or otherwise restricting the losses a party may recover for breach, non-performance or negligence. Typical features include an overall or per-claim liability cap, exclusions of indirect or consequential loss and loss of profits, time limits for claims, and carve-outs for liabilities that remain unlimited. This is a descriptive term (not a defined statutory concept), but its enforceability is governed by statute and common law. In England & Wales and Scotland, the Unfair Contract Terms Act 1977 (and in Northern Ireland, the...

In-house lawyers' guide to contractual risk: exclusion and limitation clauses, joint and several liability, misrepresentation and limitation periods

Published by a LexisNexis Risk & Compliance expert

Practice notes

This Practice Note delivers overarching guidance for in-house lawyers on excluding and limiting liability.

Exclusion and limitation of liability

Clauses that exclude or cap liability allow in-house lawyers to manage their organisation’s contractual exposure. These provisions are intensely negotiated in many agreements and come under sharp focus when matters go awry. The statutory regime regulating such terms is intricate, and the jurisprudence informing their construction is finely balanced. Mastering the underlying legal context is crucial when bargaining over exclusion and limitation clauses. Equally, clear, exact drafting underpins an effective exclusion or limitation of liability provision.

Business-to-business (b2b) contracts

Any contract term that excludes or restricts liability is subject to common law and statutory controls. Practice Note: Exclusion and limitation of liability examines exclusion and limitation of liability in business-to-business (B2B) contracts. It sets out guidance on the statutory and common law constraints governing exclusion and limitation of liability clauses (also called limitation of liability clauses, limitation clauses, exclusion of liability clauses, exclusion clauses and exemption clauses), including the Unfair Contract Terms Act 1977 (UCTA 1977) and the Misrepresentation Act 1967 (MA 1967)...

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Web page updated on 21/05/2026

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