Works despite quirks: liability cap upheld by TCC notwithstanding difficult language
In Drax Energy Solutions Limited v Wipro Limited , the TCC upheld a contractual clause said to impose a single liability cap for all claims arising out of a master services agreement.
The Background to the Case
Drax entered into a master services agreement with Wipro for the provision of software services.
Wipro was engaged to carry out the Services for a 5-year period through a number of statements of work which would be entered in to on specific ‘go-live’ dates for pre-agreed charges.
Following a number of missed milestones, and delayed deliveries, responsibility for which is disputed, Drax terminated the agreement alleging repudiatory breach of contract.
Drax subsequently issued proceedings against Wipro claiming damages for misrepresentation, quality defects, delay and losses flowing from the termination. Wipro counterclaimed for wrongful termination, prolongation costs and unpaid invoices.
Drax argued clause 33.2 of the agreement imposed a separate liability cap on each of its claims/causes of action. In contrast, Wipro contended that clause 33.2 imposed a single cap for all claims.
What did the Court Decide?
Applying the principles summarised in the well-known case of Triple Point Technology v PTT , the TCC found that despite some “linguistic quirks” clause 33.2 imposed a single aggregate cap on Wipro’s liability for Drax’s claim.
This case provides a useful reminder that limitation clauses should be drafted carefully and without ambiguity.
Where a party intends a cap on liability to apply to multiple causes of action, this needs to be expressly stated. The courts will not be sympathetic to parties who fail to draft their contracts with sufficient specificity, especially in cases like this where the parties are large corporations and had sought professional advice when drafting the contract.
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