Liability clause in contract?

[kellycomputerservices]

Hi,

I have bought an IT support contract template from the web which I give to my clients when they require IT Services. In this contract I have a section for liability. In the template, the liability section says that I will not be held liable under any circumstances.

My question is, I have PI/PL insurance, should I change this section to reflect my level of insurance, or would this be viewed as an invite for my client to claim against me? Otherwise, what is the point of carrying the insurance.

What is the normal protocol?

Many thanks in anticipation.

Keith

[Mr_Wizard]

Hi,

I'm involved a great deal with contract services, particularly IT, here is the liability section that tends to be the norm:

11 LIABILITY
(a) XYZ Limited will indemnify the customer against direct damage or injury to property or persons to the extent caused by the negligent acts or omissions of XYZ Limited or its sub-contractors under this Agreement but not otherwise by making good such damage to property or compensation personal injury PROVIDED THAT the total liability shall not exceed Two Million Pounds (2,000,000) in respect of damage to property and XYZ Limited may in the case of damage to the Equipment at its option extinguish its liability by the supply and installation of suitable alternative equipment to the Equipment so damaged
(b) XYZ Limited shall not be liable to Customer for direct or indirect consequential loss, damage or injury including loss of use of profits or of contracts or business revenue, interest, goodwill or anticipated savings on save as aforesaid for any loss, damage or injury of any kind whatsoever
(c) The Agreement states XYZ Limited’s total liability to the Customer whether in contract tort or otherwise in respect of its obligations and liabilities under this Agreement and is in lieu of and exclude all other conditions and warranties implied by statute low or otherwise;

[kellycomputerservices]

Hi Mr Wizard,

So does this say that I am covered by my Public Liability, but not my Professional Liability?

My problem is that the majority of my clients would not use my services if I were not covered by Professional Liability. For this reason, should I not include a clause for this?

Sorry if I contradict anything I have already said, or if I have not understood your clause, as I'm not really legal minded.

Many thanks.

Keith

Hi,

I'm involved a great deal with contract services, particularly IT, here is the liability section that tends to be the norm:

11 LIABILITY
(a) XYZ Limited will indemnify the customer against direct damage or injury to property or persons to the extent caused by the negligent acts or omissions of XYZ Limited or its sub-contractors under this Agreement but not otherwise by making good such damage to property or compensation personal injury PROVIDED THAT the total liability shall not exceed Two Million Pounds (2,000,000) in respect of damage to property and XYZ Limited may in the case of damage to the Equipment at its option extinguish its liability by the supply and installation of suitable alternative equipment to the Equipment so damaged
(b) XYZ Limited shall not be liable to Customer for direct or indirect consequential loss, damage or injury including loss of use of profits or of contracts or business revenue, interest, goodwill or anticipated savings on save as aforesaid for any loss, damage or injury of any kind whatsoever
(c) The Agreement states XYZ Limited’s total liability to the Customer whether in contract tort or otherwise in respect of its obligations and liabilities under this Agreement and is in lieu of and exclude all other conditions and warranties implied by statute low or otherwise;

[Lime One]

Normally Keith you limit liability to your PI cover limit. In the clause above I suspect the organisation deals in large contracts and this is their PI cover limit, it is by no means the 'norm' for the SME to place in their contracts as IT suppliers.

[Mr_Wizard]

Yes, this contract does in the extreme cover agreements up to around £250k per annum but the majority of support contracts are under £10k per annum.

As you would imagine it has to be 'tweaked' pretty much everytime a potential new client hands it to their lawyers - but it tends to be minor bits and pieces.

[Birmingham]

you can never escape liability by saying "i am not liable". you can only pretend to 100% escape liability. you can best partially escape liability by saying "take caution with this risk and that"

[kellycomputerservices]

Hi Lime,

Yes I understand that I would change the amount in that example to my PI limit, but what I want to know is does that clause above basically say that in the event of my professional negligence that causes the client to loose business or money, they can make a claim against my for the value of x (where x is the limit of my liability in my PI insurance). This is what I'm after.

So if I were to do some work on a server and messed it up causing the client to loose data, I need them to know that they could claim against me. (I deal with financial organisations that would loose a lot of money if I messed up and wouldn't deal with me if I didn't hold the PI insurance!)

I don't really understand the above clause. :(

Normally Keith you limit liability to your PI cover limit. In the clause above I suspect the organisation deals in large contracts and this is their PI cover limit, it is by no means the 'norm' for the SME to place in their contracts as IT suppliers.

[Lime One]

You can limit the non personal injury liability but you cannot generally just do it successfully by adding the clause in and hoping it works with all clients. You need to tailor the amount to the client and increase your PI cover where required for clients who tell you their business operations are worth X depending on your services. You use this within the negotiations and settle on an agreed total. It can be 105% (say) of the value of the order in some cases or the PI value. The important thing to do is to involve the client in this decision and get their agreement the value in there is agreed.

[kellycomputerservices]

OK Limes, thanks. :cool:

So could/would somebody be able to put a clause together for me which states I would be liable up to the value of x amount in the event of loss of business, earnings etc if caused by my professional negligence?

Many thanks.

Keith

[itaufait]

(I deal with financial organisations that would loose a lot of money if I messed up and wouldn't deal with me if I didn't hold the PI insurance!)


Make sure you get the right PII then, cheaper ones explicitly exclude exotic activities like pen-testing and dealing with anyone where there is a risk of immediate/significant financial loss

[kellycomputerservices]

Hi itaufait,

Thanks for your advice but the whole PI Insurance side of things is covered - that is not an issue in this case and needs to be ignored for the purpose of my question as it seems to be getting in the way of my actual question.

What I REALLY need help with is the wording of my Liability clause. As I mentioned in my last post, can anybody help with this?

Thanks all.

Keith

Make sure you get the right PII then, cheaper ones explicitly exclude exotic activities like pen-testing and dealing with anyone where there is a risk of immediate/significant financial loss