Exculpatory clause
An exculpatory clause is a provision of a contract that aims to limit or eliminate one party's liability for certain breaches, acts, or omissions. It is designed to protect one party from being held legally responsible for specific risks or damages that may arise during the execution of the contract. These clauses can limit the amount or type of damages that one party can recover from the other. For example, a contractor might limit their liability for delays to a certain monetary cap. Some clauses may exclude liability altogether for certain types of damages, such as consequential or indirect losses.
Exculpatory clauses often address specific risks inherent to construction projects, such as unforeseen site conditions, acts of nature, or third-party actions. They might establish a lower standard of care for which the contractor is responsible, thereby reducing the potential for liability. For example, liability might be limited to cases of gross negligence rather than ordinary negligence.
While often benefiting the contractor or service provider, exculpatory clauses can be mutual, providing protections to both parties in the contract.
Common examples include:
- Clauses that excuse performance due to extraordinary events beyond the control of the parties, such as natural disasters, war, or strikes.
- Provisions that cap the amount of damages one party can claim, such as limiting compensation for project delays to a specific sum per day.
- Excluding liability for indirect or consequential losses, such as lost profits or business interruptions.
- Requiring one party to indemnify the other for specific risks, thus transferring the risk from one party to another.
- Explicit waivers of specific types of claims, such as waiving the right to claim for minor defects after completion.
- Limiting liability for design errors to the amount of the designer's professional indemnity insurance.
- Excluding liability for defects in materials provided by the client or specified by the client.
Exculpatory clauses are a common feature in construction contracts to manage and allocate risk. However, their enforceability depends on how they are drafted and whether they comply with relevant legal standards and principles.
Under the Unfair Contract Terms Act 1977 (UCTA), exculpatory clauses must be reasonable to be enforceable. Courts will assess reasonableness based on factors such as bargaining power, the nature of the contract, and the clarity of the clause.
Clauses must be clearly drafted and communicated to all parties. Ambiguities are often construed against the party seeking to rely on the clause (contra proferentem rule). Clauses that attempt to exclude liability for death or personal injury resulting from negligence are generally unenforceable under UK law.
[edit] Related articles on Designing Buildings
Featured articles and news
Amendment to the GB Energy Bill welcomed by ECA
Move prevents nationally-owned energy company from investing in solar panels produced by modern slavery.
Gregor Harvie argues that AI is state-sanctioned theft of IP.
Heat pumps, vehicle chargers and heating appliances must be sold with smart functionality.
Experimental AI housing target help for councils
Experimental AI could help councils meet housing targets by digitising records.
New-style degrees set for reformed ARB accreditation
Following the ARB Tomorrow's Architects competency outcomes for Architects.
BSRIA Occupant Wellbeing survey BOW
Occupant satisfaction and wellbeing tool inc. physical environment, indoor facilities, functionality and accessibility.
Preserving, waterproofing and decorating buildings.
Many resources for visitors aswell as new features for members.
Using technology to empower communities
The Community data platform; capturing the DNA of a place and fostering participation, for better design.
Heat pump and wind turbine sound calculations for PDRs
MCS publish updated sound calculation standards for permitted development installations.
Homes England creates largest housing-led site in the North
Successful, 34 hectare land acquisition with the residential allocation now completed.
Scottish apprenticeship training proposals
General support although better accountability and transparency is sought.
The history of building regulations
A story of belated action in response to crisis.
Moisture, fire safety and emerging trends in living walls
How wet is your wall?
Current policy explained and newly published consultation by the UK and Welsh Governments.
British architecture 1919–39. Book review.
Conservation of listed prefabs in Moseley.
Energy industry calls for urgent reform.