Every commercial contract is bound to have some sort of a limitation cl. incorporated. Some are quite wide as in The Triumphant Lady [2019], where the contract between a service provider and yacht owner absolved the former of all liability “for loss of use, loss of profit, increased operating or maintenance expenses…or indirect or consequential damages”. Certain jurisdictions, such as US do not allow ultra wide limitation clauses which absolve repairers of all liabilities. So was this clause enforceable, was what US 11th Circ. Court of Appeals had to decide.
Background was that the yacht's chiller unit failed after being installed resulting in substantial damage, as it had been plumbed in reverse. The owner demanded as damages its expenses for repair, crew wages...loss of use/charter income etc.
Precedent from older cases set out three conditions for such a wide cl. to work - it must clearly indicate the parties’ intention, there must not be absolute exoneration of repairer, and parties must be of equal bargaining power. Court found yacht owner to be an educated party familiar with marine industry and capable of bargaining. The cl. did limit the type of damages recoverable. Affirming lower court’s decision, CA sided with the installer of the chiller unit.
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