Limitation of liability (LOL) clauses are a standard fixture in contracts involving architects, engineers, and other design professionals—particularly because these parties often have limited assets and depend on such provisions to manage risk. However, Washington legal authority suggests these clauses may not offer the ironclad protection many expect.
While LOL clauses can shield design professionals from significant financial judgments for negligence, they may not hold up when the conduct in question goes beyond ordinary negligence. The Washington Court of Appeals’ decision in Liberty Furniture, Inc. v. Sonitrol of Spokane, Inc. makes this clear: gross negligence, not just willful misconduct, is enough to invalidate an exculpatory clause.
Key Takeaways:
- LOL clauses are frequently used to cap liability for design professionals, often limiting damages to nominal amounts.
- Courts may refuse to enforce these clauses if they weren’t fairly negotiated or are deemed unconscionable.
- In Washington, gross negligence—conduct substantially more egregious than ordinary negligence—can nullify a LOL clause.
- The Liberty Furniture case shows how factual determinations of gross negligence can override contractual limitations.
- Parties relying on LOL clauses should draft and negotiate them carefully, understanding their limits under state law.
Read the full article here for a deeper dive into how courts view liability limitations—and how to protect your interests when drafting these provisions.