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ARTICLE · 09 JULY 2008

A New Meaning Of Consequential Loss In Technology Contracts

Clayton Utz
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Parties should not use the term "consequential loss'" in a technology contract without dedicated thought as to the purpose of the contract and the potential losses that a particular party might suffer from a breach of the contract.

AustraliaIntellectual Property
Brian Noble
Brian Noble
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Key Point

  • Parties should not use the term "consequential loss'" in a technology contract without dedicated thought as to the purpose of the contract and the potential losses that a particular party might suffer from a breach of the contract.

It is now customary for suppliers of software products and technology platform systems to attempt to disclaim their liability for consequential loss in technology contracts. The recent decision of the Victorian Court of Appeal in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26 changed the concept of the term 'consequential loss' as it is often used in limitation of liability clauses and may have a significant impact on suppliers and customers with active technology contracts.

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