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Limitation of Liability Carveouts: Confidentiality, Data Security Breaches, IP, and Indemnification

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Tuesday, July 16, 2024

Recorded event now available

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This CLE course will examine limitation of liability provisions and how to properly exclude certain types of damages from such disclaimers and/or caps. The panel will discuss typical carveouts on standard disclaimers and caps on liability. The panel will discuss best practices to limit liability for incidental, punitive, indirect, special, exemplary, extraordinary, or consequential damages or lost profits, as well as caps of liability.

Description

Limitation of liability provisions are standard in almost every contract and are essential in helping the contract parties limit their risk. But these provisions may also contain broad disclaimers and exceptions.

Some exclusions are commonly accepted (as negotiated by the parties) since if certain damages were not excluded or "carved out" of standard disclaimers of and caps on liability, certain breaches of the contract would have either no remedy or a substantially inadequate remedy.

Issues can arise out of "bad conduct" carve-outs in indemnification and other limitation of liability provisions that when not properly drafted can defeat the intended purpose of limited liability provisions. Common practices for limitation of liability provisions also may vary based on the type of contract. For example, contracts for of sales of business may have carveouts to liability limitations that are not commonly found in supply or services contracts.

Listen as our expert panel discusses the types of carve-outs that are typical in limited liability provisions, when such carve-outs should be employed, and what risks can (and cannot) be mitigated.

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Outline

  1. Limitation of liability
    1. Carve-outs
      1. Confidential information
      2. Breach of data security obligations
      3. Intellectual property
      4. Indemnification
      5. Restrictive covenants
      6. Payment obligations
    2. Bad conduct
      1. Willful misconduct
      2. Gross negligence
      3. Violation of law
    3. Variations in M&A agreements
      1. Diminution in value
      2. Damages based on a multiple
      3. Fraud
      4. Materiality scrapes
  2. Best practices
    1. Commercial agreements
    2. M&A agreements
    3. Damages awarded in third-party claims
    4. "Special damage" caps

Benefits

The panel will discuss these and other key issues:

  • How can parties quantify and exercise control over potential liabilities that have been excluded from a limitation of liability provision?
  • What are "bad conduct" carve-outs in indemnification and limitation of liability?
  • What are the risks of carve-out language being over-expansive and defeating liability protection?

Faculty

Allen, Joseph
Joseph B. Allen

Member
Willcox & Savage

Mr. Allen is a corporate transactional attorney who concentrates his practice on M&A transactions, private...  |  Read More

Kennedy, Ashley
Ashley Kennedy

Attorney
Foley & Lardner

Ms. Kennedy is a Technology, Transactions, Cybersecurity & Privacy Practice Group member within the firm’s...  |  Read More

Overly, Michael
Michael R. Overly

Partner
Foley & Lardner

Mr. Overly focuses his practice on drafting and negotiating technology related agreements, software licenses, hardware...  |  Read More

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