Any such cap is subject to the ‘reasonableness’ provisions of s11(1) UCTA 1977, which say the term must ‘have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made’. On the facts, the clause was reasonable since the clients were familiar with limitation of liability clauses in professional contracts; the clients had discussed the provision with the solicitors; the retainer included a provision concerning discussing variation of the cap; and overall the cap was determined on reasonable commercial principles, taking into account insurance cover and its expense as well as the circumstances of the transaction.

The point to appreciate is that ‘reasonableness’ applies. Not every cap will be ‘reasonable’ – you must be prepared to justify it (and that will usually involve a discussion about the provision – see, for instance, the case noted in last month’s issue, p35, where a law firm failed to do that). Marplace v Chaffe Street [2006] EWHC 1919 (Ch). Source: Barlow Lyde & Gilbert. © Practical Lawyer