Enforceability of Limitation of Liability Clauses in Engineering Contracts

Abstract

This paper demonstrates the importance of limitation of liability clauses for many engineering services agreements. Engineers, engineering firms, and clients often negotiate extensively over the specific terms of the limitation clause. However, little thought is given to whether or not the limitation would be upheld in a court of law despite the very real possibility that it would not be enforced should a dispute arise. It is concluded that following a list of guidelines will greatly increase the likelihood of enforcement of a limitation clause. This paper discusses the different types of limitation of liability clauses, the likelihood of their enforcement in a legal action, and the major factors that will affect whether the clauses are enforced on the basis of and lessons learned from several litigated/settled cases.