One ceiling, or one per claim?
When a contract caps liability, the first question is scope: does the cap apply once, as a single aggregate ceiling for everything arising under the contract, or does it reset for each separate claim? On a large project with several distinct failures, the difference can be enormous - a single cap holds total recovery to one figure, while per-claim caps can stack.
Drafters often leave this ambiguous, using phrases like total liability limited to a figure from the date the claim first arose, without saying whether the claim means one claim or each claim. That ambiguity is where the dispute lives.
Drax v Wipro: a single aggregate cap
In Drax Energy Solutions Ltd v Wipro Ltd [2023] EWHC 1342 (TCC), an IT project failed and the customer claimed around GBP 31 million. The cap limited liability to 150% of the charges in the preceding twelve months. The customer argued the wording allowed multiple caps - one per claim, each with its own lookback - which would have produced a materially higher ceiling. The supplier argued it was a single aggregate cap of about GBP 11.5 million.
The court held it was a single aggregate cap. Total liability pointed to one ceiling; the clause said the claim, not each claim or per claim; and elsewhere the contract showed the parties knew how to draft a single aggregate cap when they meant one. Drax was held to GBP 11.5 million.
Why the court read it that way
The reasoning is a drafting lesson. Total liability is strong language for a single ceiling. The singular the claim rather than each claim undercut the multiple-cap reading. And internal consistency mattered: where another clause used clearly aggregate wording, the court inferred the same intention here. The judge accepted the clause was far from a model of clarity but still gave it a single-cap meaning.
Crucially, the court rejected the argument that a single cap made no commercial sense. Drax still had a substantial, if reduced, recovery, and Wipro had the protection it bargained for. A cap that hurts is not the same as a cap that is absurd.
The drafting that decides it
If you want a single aggregate cap, say so: the Supplier's total aggregate liability for all and any claims arising under this Agreement shall not exceed the stated figure, and consider adding that the cap applies cumulatively to all claims regardless of when arising or the legal basis. If you want per-claim caps, say liability for each separate breach shall be limited to the figure, ideally with an overall aggregate ceiling on top.
Avoid the Drax wording - total liability from the date the claim first arose - which invites exactly the argument that failed there. As ambiguity is read against the party relying on the cap, the party seeking protection has the most to gain from clarity.
Checking the cap that protects you
From the customer's side, a single aggregate cap on a long contract can be punishing, especially early when a fee-based cap is small. Watch caps expressed as a percentage of recent charges, multiple caps with no clear hierarchy, and lookback periods that do not fit the contract term. From the supplier's side, the single aggregate cap is the prize - make sure the words deliver it.
In review, the cap's structure deserves as much scrutiny as its number: a clear figure attached to an unclear scope is not real protection for either side.
Use at the desk
Practical checklist
- Decide whether the cap is a single aggregate ceiling or resets per claim, and state it explicitly.
- For a single cap, use total aggregate liability for all and any claims arising under this Agreement.
- For per-claim caps, use each separate breach and add an overall aggregate ceiling.
- Avoid ambiguous wording like total liability from the date the claim first arose (Drax v Wipro [2023] EWHC 1342 (TCC)).
- Check percentage-of-fees caps and lookback periods fit the contract length, especially in year one.
- Remember ambiguity is read against the party relying on the cap - clarity favours the protected party.
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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