No general rule
There is no general rule on whether a clause limiting liability applies to indemnities in the same agreement. It is a question of construction in each case. You might argue that an indemnity claim is a claim in debt - a promise to pay a sum - rather than a liability, and so falls outside a cap on liability; but the courts have not settled that, and you do not want to be the test case.
The result is uncertainty in both directions: an indemnified party may find its indemnity unexpectedly capped, and an indemnifier may find the cap it negotiated does not catch the indemnity at all.
Drax v Wipro: name them expressly
The cure is explicit drafting, and Drax Energy Solutions Ltd v Wipro Ltd [2023] EWHC 1342 (TCC) shows it. The cap there applied to liability whether arising in contract (including under an indemnity), in tort, or otherwise - the express reference to indemnities removed any argument that they sat outside the cap.
Without that kind of wording, you are gambling on how a court will construe the relationship between the cap and the indemnities.
Drafting it either way
If you want indemnities inside the cap, say so: the total liability of the party under or in connection with this agreement, including without limitation under any indemnity, shall not exceed the cap. If you want them outside, say that instead: the limitation in clause X shall not apply to the party's obligations under the indemnities in clauses Y and Z.
Either is fine; what is dangerous is silence. State the relationship between the cap and each indemnity rather than leaving it to construction.
The warranty/indemnity election
Caps interact with another choice. Where the same facts support both a warranty claim and an indemnity claim, the claimant may choose which to pursue, subject to no double recovery. That was confirmed in Learning Curve (NE) Group Ltd v Lewis [2025] EWHC 1889 (Comm), where the buyer elected the warranty claim worth GBP 5,211,625 over the narrower indemnity worth GBP 783,325.
Different caps for warranties and indemnities expressly contemplate that one route may yield more than the other - so think about which route you want to be the larger, and cap accordingly.
What to check
In review, find every indemnity and check the cap clause for an express in-or-out statement. If the cap is silent on indemnities, flag it: the indemnified party should want valuable indemnities outside the cap, and the indemnifier should want them inside. And where warranties and indemnities overlap, check the caps on each, because the claimant will elect the more favourable route.
The detailed mechanics of caps - single versus aggregate, carve-outs, UCTA - are in the limitation-of-liability guides; the point here is simply that indemnities must be addressed expressly within that regime.
Use at the desk
Practical checklist
- Do not assume the liability cap does or does not cover indemnities - it is a question of construction (no general rule).
- State expressly whether each indemnity is inside or outside the cap (Drax v Wipro [2023] EWHC 1342 (TCC)).
- For indemnities inside the cap, use "including without limitation under any indemnity".
- For indemnities outside the cap, carve them out by clause reference.
- Where warranties and indemnities overlap, check both caps - the claimant elects the better route (Learning Curve v Lewis [2025] EWHC 1889 (Comm)).
- For the cap mechanics (single vs aggregate, carve-outs, UCTA), see the limitation-of-liability guides.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
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