Limits on Contractual Limits of Liability — Part I

While the term "LOL" in an Internet chat environment denotes a jocular sentiment (i.e., "laugh out loud"), in the context of legal contracts an "LOL" clause is no laughing matter. Rather, the "Limitation of Liability" clause is of central importance in any agreement for the acquisition of tech-related products or services. LOL language, however, can also be found in a range of other commercial agreements. Therefore, several recent cases that address LOL contract matters discussed below (and next edition) will be of keen interest to companies buying or selling tech products and services.

Tech LOL Clauses

It is extremely rare for the supplier of IT equipment, software and services to a customer not to limit supplier's liability in the contract between supplier and customer. While it is difficult to generalize, most LOL provisions look something like this: "direct" damages are limited to some percentage of the revenue paid by customer to supplier; there is a general