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Offshore Construction Contracting Principles

Maximum Cumulative Liability

Principles

It is recommended that the following principles be applied in relation to Contractor's Maximum Overall Limit of Liability under offshore construction contracts:

Contractor's overall cumulative liability,

  • howsoever arising, either under the Contract or at law,
  • including but not limited to breach of duty and/or tort,
  • or in any other way connected with the performance of the Work hereunder,
  • with the exception of only the indemnities given by Contractor to Company under the Contract,

shall be limited to a percentage of the Contract Price [typically fifteen percent (15%)].


Clarifications / Considerations

Due to competition with other contractors it is impossible for Contractor to include sufficient allowance in the Contract Price to enable Contractor to assume liability for any and all damages that may be incurred by Company in the event of default of Contractor.


Example Maximum Overall Liability Clause

The following is an example of a proper Maximum Overall Cumulative Liability article.

X. OVERALL LIMIT OF LIABILITY

Contractor's overall cumulative liability, howsoever arising, either under the Contract or at law, including but not limited to breach of duty and/or tort, or in any other way connected with the performance of the Work hereunder, with the exception of only the indemnities given by Contractor to Company under the Contract, shall be limited to fifteen percent (15%) of the Contract Price in aggregate.