Can I limit my liability in my business terms?

Corven guide, 6 October 2026

Yes, within limits set by the Unfair Contract Terms Act 1977. Some liability cannot be excluded at all, and most other exclusions and caps in business terms work only if they are reasonable.

What cannot be excluded

Section 2(1) provides that a person cannot, by a contract term or notice, exclude or restrict liability for death or personal injury resulting from negligence. For other loss or damage caused by negligence, section 2(2) allows an exclusion or restriction only in so far as the term satisfies the requirement of reasonableness.

Your own standard terms

Where the other business deals on your written standard terms, section 3(2) prevents you from relying on a term to exclude or restrict liability for your own breach of contract, or to claim the right to perform substantially differently from what was reasonably expected or not at all, except in so far as the term satisfies the requirement of reasonableness.

The reasonableness test

Section 11(1) asks whether the term was a fair and reasonable one to include, having regard to the circumstances known to the parties, or that ought reasonably to have been known to them or in their contemplation, when the contract was made. Where the term caps liability at a specified sum, section 11(4) directs attention in particular to the resources you could expect to have to meet the liability and how far you could have covered yourself by insurance. Under section 11(5), it is for the party relying on the term to show that it is reasonable.

A cap should therefore be set with those factors in mind, not copied from another business's terms.

This guide is general information about the law of England and Wales. It is not advice on your situation.