CASE

Duff Inc. are appointed main contractors under a construction contract by Cairn Products plc, to build an apartment block. The contract between Cairn and Duff provides, inter alia, that ‘Duff Inc.'s liability for loss will be limited to $10 million’. Assume this is a valid limitation of liability, not open to challenge.

Duff enter into a subcontract with Spark Ltd, to carry out the electrical work on the apartment block. Due to Spark's negligence in carrying out the electrical works, certain floors in the apartment block are damaged. This will cost $15 milion to rectify.

Given the limit on Duff's liability, Cairn raise proceedings in tort against Spark. Assume that this is a valid claim, the requirements of a relevant claim in tort having been satisfied by Cairn. In defending the action, Spark seek to rely upon the limitation of liability clause in the contract between Cairn and Duff.

Questions

• 1. Can Spark rely on the limitation of liability clause?

• 2. Would your answer to 1 be different if the contract between Cairn and Duff provided that ‘Duff Inc. and its agents’ (including independent contractors’) liability for loss will be limited to $10 million’?

DISCUSSIONS

BELGIUM

Siel Demeyere and Vincent Sagaert

I. Operative Rules

• 1. Spark cannot rely on the limitation of liability clause.

• 2. In this scenario, Spark could rely on the limitation of liability clause.