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ARTICLE · 13 JULY 2023

Courts Uphold Badly Drafted Liability Cap

Gowling WLG
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In the recent High Court case relating to an IT contract Drax Energy Solutions Limited v Wipro Limited[2023] EWHC 1342 (TCC), the courts have looked closely – as preliminary issues – at the drafting of a clause capping liability.

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In the recent High Court case relating to an IT contract Drax Energy Solutions Limited v Wipro Limited[2023] EWHC 1342 (TCC), the courts have looked closely – as preliminary issues – at the drafting of a clause capping liability.

Disputed liability cap

The liability cap drafting at the core of the dispute provided that:

"the Supplier's total liability to the Customer... arising out of or in connection with this Agreement (including all Statements of Work) shall be limited to an amount equivalent to 150% of the Charges paid or payable in the preceding twelve months from the date the claim first arose."

Wipro (the supplier – relying on the cap) claimed that this wording created a single aggregate cap on liability of just over £11.5 million (150% of the first year's charges of £7,671,118). Drax disagreed, querying:

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