Limitation of Liability Clauses

Written by Richard O'Shea, Solicitor TEP · Mary Molloy Solicitors, established 1981 · Last reviewed 21 August 2026

What the clause does

A limitation clause typically works in layers: it excludes certain loss types entirely (commonly "indirect or consequential loss, loss of profit, loss of data"), caps what remains (a fixed sum, or a multiple of fees paid), and carves some liabilities out of the cap (death or personal injury caused by negligence, fraud — which cannot lawfully be excluded — and often confidentiality or IP breaches). Reading the layers together, against your realistic worst-case scenario, is the whole game: a €10m contract with liability capped at three months' fees means the supplier's maximum downside is a rounding error on yours.

What Irish law says

Between businesses, freedom of contract is the starting point — but exclusion clauses are construed strictly against the party relying on them, ambiguity is resolved against the drafter, and a clause must be properly incorporated to bind. Statutory limits also apply: liability for fraud cannot be excluded, and exclusions of the implied undertakings in sale-of-goods and services legislation face fairness and reasonableness constraints — against consumers, much of this territory simply cannot be excluded at all under the Consumer Rights Act 2022.

Negotiating it

• Run the scenario: what is the worst thing this counterparty can realistically do to you, and what would the clause pay?
• Make caps mutual, or justify why not
• Check the exclusion of "loss of profit" — for many businesses that is the only loss a breach would cause, making the remedy an empty box
• Match carve-outs to insurance on both sides: a cap set above the other side's cover is a promise from an empty pocket
• Watch the interaction with indemnities — an indemnity outside the cap swallows the whole architecture