Provision Limiting Liability for Breach of Contract Enforceable

On January 29, 2020, the Second Department issued a decision in Astoria Generating Co., LP v. Riley Power, Inc., 2020 NY Slip Op. 00560, enforcing a contracual limitation of liability provision, explaining:

A clear contractual provision limiting damages is enforceable, unless there is a special relationship between the parties, there is a statutory prohibition against it, or it is against public policy because the conduct of the party seeking to enforce it was grossly negligent. Here, Riley established, prima facie, that the clear limitation of liability provision contained in the addendum to the contract was part of an arm's length transaction between the parties, two sophisticated commercial entities, and is thus valid and enforceable. Riley further established, prima facie, that there was no special relationship between it and Astoria, that there was no statutory prohibition against the limitation of liability provision, and that the provision was not against public policy.

(Internal citations omitted).

A key aspect of commercial litigation is calculating damages. Contract clauses limiting damages are common and how they are enforced can make a big difference in whether, and if so, how, you litigate an action. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding a contractual damages limitation clause.