Indemnities and limitations of liabilities

I am using one of your templates – the balanced version of the Web Design T&Cs.  Please explain the meaning of the following clause:

11.2: “The limitations and exclusions of liability set out in this Clause 11 … will [not limit or exclude / limit and exclude] the liability of the parties under the express indemnities set out the Agreement[, and any amounts paid under any indemnity in the Agreement shall not count towards any aggregate liability cap under Clause 11.10].”

Also, at what level should caps on liability be set?

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Alasdair Taylor's Answer

An indemnity is a contractual clause providing that one party will insure the other party against losses arising out of a particular event or events. For background information on indemnities in IT contracts, see:

Accordingly, 11.2(c) does two different things:

First, it specifies whether the limitations of liability in the contract apply in the case of a claim under an indemnity clause.  Often, limitations of liability will not apply in such a case – although it does depend upon the particular circumstances.

Second, where there is an aggregate liability cap in the contract, the clause can be used to specify that payments made under the indemnity clause do not “count” for the purposes of that liability cap.

If there are no indemnities in your contract, 11.2(c) can be ignored.  If there are indemnities but no liability caps, the second part of 11.2(c) can be deleted.

As regards the setting of liability caps, see:

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