Article 50 GENERAL PRINCIPLES OF RISK ALLOCATION AND RESPONSIBILITY

PASSING OF RESPONSIBILITY FOR THE WORKS

50.1 The Contractor shall take full responsibility for the care of the Works or any Section of them from the Start Date until the Date of Taking-Over, at which time responsibility for the care of the Works and the risk for loss or damage to the Works shall pass to the Employer.

50.2 If Taking-Over occurs for any Section of the Works, responsibility for the care of the Section shall then pass to the Employer.

Article 51 PURPOSE OF THE LIMITATION AND EXCLUSION ARTICLES

51.1 The purpose of these limitations-of-liability provisions is primarily to ensure that neither Party is liable for losses that are difficult to estimate or provide for or are out of proportion with respect to the value of the Contract obligations, arising from breach of contract or other liability. This approach should ensure that the Parties can agree on the most reasonable Contract Price for the Works.

Article 52 LIABILITIES OF THE PARTIES AND THEIR RECIPROCAL LIMITATIONS AND EXCLUSIONS

DAMAGE TO PROPERTY OTHER THAN THE WORKS

52.1 A Party shall be liable to the other Party for damage to or loss of any property other than the Works, only to the extent that such damage or loss arises out of the negligence or intentional misconduct of the Party said to be liable.

EXCLUSIONS FROM LIABILITY

52.2 Notwithstanding any law or practice to the contrary, in no circumstances will either Party be responsible to the other for treble, exemplary, moral or punitive damages, or any type of non-compensatory damages, no matter how they are described.

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52.3 Except as provided in Article 35 (Variations), Article 37 (Delay Damages), Article 42.7 (Failure to certify), Article 44.1 (Delayed Payment) or Articles 46.12 through 46.15 (Performance-related liquidated damages), neither Party shall be liable to the other Party for loss of profit, loss of income, loss of production or wasted expenditure, or for indirect or consequential damage however described, including (without limiting the generality of the foregoing) loss of use, loss of revenue, loss of interest, loss of data or information or similar losses.

LIMITATION OF LIABILITY FOR INDIVIDUAL CLAIMS

52.4 In all cases (including obligations to indemnify and/or hold harmless the other Party, if any) a Party’s liability per damaging event shall be limited to an amount of 7.5% of the initial Contract Price with the exception of liability under Article 34 (Intellectual Property Rights) or under Article 49 (Defect Correction Period), including, without limitation, expenditure for the performance of the Contractor’s obligations by a third party pursuant to Article 49.11 (Failure to remedy Defects), Article 57 (Suspension and/or Termination of the Contract) and Article 58.17 (Failure to take out or maintain insurance), all of which shall be subject only to the limitation of liability mentioned in Article 52.5.

OVERALL LIMITATION OF LIABILITY

52.5 Notwithstanding any other provision of this Contract, neither Party can claim that the other Party must pay it, by way of damages or any other form of compensation for breach of its duties, under or in connection with the Contract (including obligations to indemnify and/or hold harmless), in tort, or for negligence or gross negligence (or any or all of them), sums that when aggregated with other sums paid under the Contract for damages or compensation for breach of contract or otherwise, amount to more than 30% (excluding interest) of the initial Contract Price.10

52.6 Nothing in this Contract excludes or limits liability for fraud.

Article 53 TIME LIMIT FOR LIABILITY

53.1 Neither Party shall be entitled to claim from the other Party for any loss or damage howsoever caused more than ten years after Taking-Over.

Article 54 EXTENSIONS OF LIMITATIONS AND EXCLUSIONS FROM LIABILITY TO CERTAIN THIRD PARTIES

54.1 The foregoing limitations and exclusions of liability are also for the benefit of, and apply to, each Party’s personnel, agents, Sub-contractors, suppliers and their respective personnel.

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Article 55 WARRANTY FOR FUTURE PURCHASERS OR OPERATORS

55.1 The Employer warrants that any future purchasers or operators of the Plant or Works shall be bound by the exclusions and limitations of liability in this Contract, and shall, if necessary to maintain this warranty, assign or novate this Contract to any such future purchasers or operators, or otherwise obtain their agreement to its terms and conditions.

10
This is a cap on liability that changes from industry to industry and that could be negotiated from contract to contract. The 30% figure is less than the traditional figure in civil engineering and more than the figure normally seen in oil and gas contracts