Limitation of liability

Typical wording

The supplier's aggregate liability is limited to the fees paid during the last twelve (12) months. The supplier is not liable for indirect loss.

What it means

If something goes wrong, the most you can recover is an amount equal to what you have paid over a given period. Loss that follows indirectly from the failure - lost revenue, for example - is not covered.

Common practice

A cap equal to 6-12 months of fees is common in Norwegian supplier agreements. Carve-outs for gross negligence, wilful misconduct and breaches of data protection rules are also common, because liability for those cannot be freely limited.

What to look for

• Is the cap lower than your real exposure if the delivery fails?
• Does the limitation apply both ways, or only to the supplier?
• Are gross negligence and wilful misconduct carved out of the limitation?
• Are breaches of data protection and confidentiality kept outside the cap?

Source