Limiting/Excluding Liability For Risks

This page is an extract from the full topic guidance on Limiting/Excluding Liability for Risks [69KB PDF]. It details any Constraints associated with Limiting/Excluding Liability for Risks, provides a summary of the Authoritative Guidance and lists any essential reading, further reading or associated documents.

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Constraints

None.

Authoritative Guidance Summary

Although there is a general presumption that the Ministry of Defence (MOD) will not provide contractors with a limitation to their liabilities under contract or General Law without good defence and value for money reasons, limiting or excluding liability is a matter to be considered case-by-case on its merits.

Before accepting any liabilities, the acquisition team must conduct a full appraisal to assess the risks, as well as the legal aspects and obtain the approval of the appropriate finance officer.

The limit or cap to liability should take account of the best estimate of the losses that might be suffered by MOD (and any other relevant, associated bodies) in the event of a default by the contractor, the likelihood of those losses occurring and the value for money considerations in limiting liability. The assessment should take account of both direct and consequential losses.

The main contractual liabilities relate to liability for loss or damage to Issued Property (for example, Government Furnished Assets); liability for loss or damage to Articles (for example, contracts for supply of goods); and liability for contractor personnel on Government establishments.

Liability for contractor employees travelling as passengers in Crown aircraft flown by Crown employees, or in civilian aircraft on charter to MOD are covered by the terms of the Warsaw Convention as amended by the Hague protocol in accordance with the Carriage by Air Acts (Application of Provisions) Order 1967 (Statutory Instrument (SI) 1967/480).

Exemption from liability for death and personal injury arising from negligence should not be given to, nor obtained from, contractors except under the Convention on Limitation of Liability for Maritime Claims 1976 where ship owners have a statutory right to limit liability for death and personal injury in certain circumstances.

MOD does not normally limit a contractor's liability for loss or damage to property arising from negligence.

DEFCON 611 [19KB PDF] (Issued Property) sets out the contractor's liability for loss or damage to Issued Property; DEFCON 612 (Loss or Damage to Articles) [12KB PDF] sets out the contractors' liabilities for loss or damage to Articles; and DEFCON 76 (Contractors Personnel at Government Establishments) [36KB PDF] sets out the liabilities in respect of contractors personnel at Government establishments.

Central Agreements on liability for damage to Government property have been reached with companies who contract regularly with MOD. The agreements are Restricted-Commercial.

Commercial officers, in collaboration with the appropriate financial authority, are responsible for managing contractors' extra-contractual claims under limitations of liability included in contracts.

Associated Documents

Annex A - Contractor: Contractual And General Law Liabilities Relating To Property and Personnel [23KB PDF]

Annex B - MOD: Contractual And General Law Liabilities Relating To Property and Personnel [31KB PDF]

Limiting/Excluding Liability For Risks

Constraints

Authoritative Guidance Summary

Associated Documents

Further Reading

Change History