Contracts often include exculpatory provisions, usually known as “limitation of liability” clauses. An exculpatory clause typically relieves one party of liability for damages they may cause to the other party during the execution of the contract. A party will usually limit its liability to the amounts it would have been paid under the contract. When a party includes an exculpatory clause that disclaims all liability from its failure to perform the contract, it raises a question of whether the clause is enforceable. Because the party has no enforceable obligation to perform its contract, then it has not really agreed to do anything. Courts may find this clause renders the entire contract to be “illusory” and unlikely to be enforceable. Peter Mavrick is a Miami business litigation attorney, and also represents clients in business litigation in Fort Lauderdale and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringment litigation, and other legal disputes in federal and state courts and arbitration.
In Pier 1 Cruise Experts v. Revelex Corp., 929 F.3d 1334 (11th Cir. 2019), Pier 1 Cruise Experts (“Pier 1”) hired Revelex Corp. (“Revelex”) to build a customized website. The parties entered into a service agreement. The service agreement had an exculpatory clause, which stated, in pertinent part:
Revelex shall not be liable … for any direct, special, indirect, incidental, consequential, punitive, exemplary or any other damages regardless of kind or type (whether in contract, tort (including negligence), or otherwise), including but not limited to loss of profits, data, or goodwill, regardless of whether Revelex knew or should have known of the possibility of such damages…. Customer waives any and all claims, now known or later discovered, that it may have against Revelex and its licensors and vendors arising out of this agreement and the services.