Transatlantic Relations - Key Differences Between Uk And Us Law

Any lawyer in the technology sector is likely to have scratched their head at some point on whether or not "special damages" are something they should be worried about. The weighty presence of US companies in the technology market means that UK technology lawyers – and in fact anyone downloading a piece of software from the US – are likely to come across contracts which are either governed by US law, or have been adapted from US contracts. Often these are filled with slightly unfamiliar terminology, and may contain terms which would never stand up in a UK negotiation, let alone a UK court.

With this in mind, we've joined forces with Garry Berger, a technology-focussed attorney based in Connecticut with Berger Legal, to explore some of the similarities and differences in the way that key legal issues in IT contracting take shape here and in the US. These will obviously differ from one state to the next and so the following is to be read through that lens, but nonetheless the following observations appear to have some level of general applicability.

B2B exclusions and limitations of liability are pretty much always enforceable in the US, regardless of whether one company has far more bargaining power than the other or whether the contract is on standard terms. In other words there is no UCTA-type protection in terms of limitations of liability having to be reasonable, meaning that, for instance, a company could receive no service at all for the money it had paid and still be barred by the contract from claiming any damages at all. One possible exception is in the area of damages arising from wilful misconduct or similar egregious conduct, which in some states may not be disclaimed. In relation to consumers, different states have different consumer protection laws which would intervene on e.g. limitations of liability, with the result that such swingeing exclusions of liability will sometimes not be enforceable. The term "indemnity" is often understood to imply an indemnity against third party claims, rather than a UK-style indemnity for all losses between the two contracting parties. As such, what appears to a UK lawyer to be a clause giving far-reaching and onerous indemnity recovery may in fact only provide such recovery for third party claims, and may therefore be more acceptable – however it will always be worth asking for and drafting in clarification that only third party claims are in scope. "Special" losses, which often appear in US...