Liability clauses are included in contracts to protect the customer from exposure to loss due to a breach by the supplier. A risk-averse customer may see clauses that impose unlimited liability as protection against a supplier breach, but this comes at a cost: the supplier must take additional steps, either in delivering the project or through risk-financing measures like insurance, to fulfil its obligations, and the additional costs will be included in the price.
Broadleaf has developed a risk-based process for estimating limits of liability that offers:
- Improved insight into the potential sources of loss for the customer
- A common understanding between customers and suppliers of the nature and size of potential liabilities
- Avoidance of costs associated with unnecessarily high limits of liability that deliver little and do not reflect actual risks
- Simpler and faster negotiation of contract terms associated with supplier liability.