Blog, Tech - June 13, 2022
10 Terms To Consider When Agreeing To Technology Contracts Part Two
1656, 1656, adrian-curiel-vbQsU3kVVPI-unsplash (3), adrian-curiel-vbQsU3kVVPI-unsplash-3.jpg, 2131781,,, , 4, , , adrian-curiel-vbqsu3kvvpi-unsplash-3, inherit, 1306, 2023-08-17 15:40:33, 2023-08-17 15:40:33, 0, image/jpeg, image, jpeg,, 3888, 2592, Array

In case you missed it, we recently published part one here of our guide to the most commonly seen terms in insurance contracts. This covered clauses such as acceptance, contractors and freelancers, deadlines, dispute resolution and force majeure.

Now, we’re diving into part two. Read on to discover the next selection of key phrases to be aware of before you sign on the dotted line.


  1. Jurisdiction

An important area to consider within any contract with an overseas client is jurisdiction, and this is one of the most common things our clients push back on. The clause itself denotes the country or state where any litigation relating to the contract would be heard.

It goes beyond the question of whether the insurance policy would respond. Instead, it needs to consider wider aspects, such as how easy it would be to enforce a judgement in said territory, or how much disruption would be caused by the business if senior management had to travel and participate in overseas legal action.


  1. Limitation of liability

Many of our clients have asked us to review this clause over the years, as it normally includes a specific monetary amount. In essence, limitation of liability serves to clearly limit the type of compensation, and the amount, one contracting party can recover from the other.

These limits can vary depending on the contract size, geographical scope, services to be delivered, and the risk appetite of contracting parties. And remember, not all penalties agreed under contract will be insurable, so take care when agreeing to punitive damages and consequential loss.


  1. Performance obligations

To fulfil the contract, certain things must be delivered. It’s vital that both parties clearly understand exactly what’s expected of them to perform the contract, and that these obligations can be reasonably achieved.

Each party should then carefully consider the availability and criticality of their resources, from systems to employees. Bottlenecks and potential critical failures need to be recognised, as do aspects beyond either party’s control, such as reliance on third parties, outsource providers, and resellers.


  1. Scope creep and renegotiation

Things change, that’s why it’s important to include a function that allows contract terms to be renegotiated. It might be that the customer seeks additional functionality in the systems to be delivered, or perhaps the provider can no longer meet a milestone due a variety of circumstances.

Including a renegotiation clause can save both parties cost and heartache, allowing changes to be accommodated, and avoiding potential claims for breach of contract.


  1. Term and termination

Technology insurers often ask for details on the length of contracts worked upon, as the term of a contract can be a key risk factor. Long and complicated bespoke projects can lead to more expensive claims than simple ones with standard deliverables and short timescales

This clause should define the term of the contract, and any subsequent renewal conditions. It should also detail the situations that the contract can be terminated under, by which party, and how that termination would be executed. What’s more, it needs to clarify the rights and responsibilities of the contracting parties upon termination.


Reach out to RiskBox

Insurance jargon can be difficult to understand, so we hope this two-part blog has provided transparency on some of the key terms that often crop up in your contracts. If you need further support, don’t hesitate to get in touch with the friendly team at RiskBox.



Simply fill in our online contact form to arrange a chat at a time that suits you, or call 0161 533 0411 today.


Photo by Adrian Curiel on Unsplash

Latest blog posts

Read more
Contact Us

Have your own insurance challenge?

Get in touch with the RiskBox team for a solution.
You can reach us on 0161 533 0411 or
Alternatively, click the button below and fill in our contact form.
Chat with us