Have you ever wondered if you can limit your liability on a construction project? Well, there are ways that this can be done. Nebraska courts have allowed contractors to limit their liability, but only in limited circumstances.
The contract might contain a waiver of subrogation clause. This means that if the owner’s insurer pays for damage, even if it’s caused by the contractor, the owner cannot pursue claims against the contractor or subcontractor. Courts will generally enforce a well written waiver of subrogation clause because it presumes that the parties have insurance to cover the loss. And, the waivers encourage the parties to anticipate risks and to procure insurance covering those risks.
On the other hand, damage limiting clauses, especially those that say an owner may not recover against a contractor, even for the contractor’s gross negligence, will not be enforced.
Somewhere in the middle are waivers of consequential damages. These waivers generally apply to damages such as loss of use, income, profit, business and reputation. Sometimes the courts will enforce these waivers, especially when they are mutual, in that both parties are waiving these types of claims, and sometimes they don’t.
Are you effectively limiting your liability?