Limitation of liability

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There is limited liability, in the sense of the corporate veil, and the artifical trench the King’s Bench draws around a corporation, and there is limiting liability, in the sense of putting a contractual limitation on the amount for which one may be liable in damages to another, notwithstanding the damages one has caused.

There are understandable versions of this — the limited recourse terms of a multi-issuance repackaging vehicle being the clearest example; there are less standable versions: auditors, consultants, lawyers and like-minded service providers who with one hand extract rent, and with the another deny liability for the “service” they provided beyond the “value” of the rent they extracted, and then there is this fun confection which we can’t quite understand the point of, but it tickles us that some earnestly lawyer might have thought she was, with it, doing some good:

Liability. Unless this Agreement contains an explicit liability of a Party, the Parties limit their liability to the maximum extent permitted by applicable law.

At both fearful of the terrible calibre of one’s own drafting — shouldn’t one know whether the agreement contains an “explicit liability”, since one drafted it? — and also fearful of the phantoms of the unknown: if the parties’ liability is limited by applicable law to a maximum, then what one achieves by laying one’s feeble contractual gossamer across the same bolted-shut iron door we stuggle to think.

See also

• Repackaging and limited recourse