Discussion

The baseline MISMA provisions have been simplified as much as possible so that there is a single financial limit to cover all relevant liabilities. For straightforward contracts which do not require the Contractor to take on specific large liabilities this approach is likely to be effective, but where there are specific risks that would be better handled under a separate liability head an alternative approach may be required.

Provisions to consider

Provision and reference

Considerations

Limits of liability

Reference Model Agreement Clause 52

Limit of liability provisions are one of the most commercially important provisions for any contract and commonly require Board level sign-off (sometimes from parent organisations). Additional degrees of complexity or broadening of financial limits can therefore have a disproportionate effect in slowing negotiations.

Consider whether any of the following risks are either proportionately large or of specific interest to the business:

•  loss or damage to Authority premises, property or assets

•  loss, damage etc to Authority Data

•  aggregate service credits

•  other claims, losses or damages

The introduction of more specific heads of liability should, as far as possible be based on an objective and fair risk assessment.

Users should read Section 4 of "A negotiating guide for the public sector", published by OGC in March 2010 with support from Partnerships UK and Intellect.