Are the limits on liability reasonable?
AWS
Azure
Compute
Engine
Does the provider limit its liability?
0 Yes
0 Yes
0 Yes
Elimination of consequential, indirect damages?
0 Yes
0 Yes
0 Yes
Elimination of direct damages?
0 Yes
0 Yes
0 Yes
By type?
SLA credits as sole and exclusive remedy
lost use, lost data defined as consequential damages
0 Yes
0 Yes
-1 Yes
0 Yes
0 Yes
0 No
0 Yes
0 Yes
0 No
Cap on Dollar Amount?
Is amount reasonable?
0 Yes
-1 No
0 Yes
-1 No
0 Yes
-1 No
Are there reasonable carve outs from limits on liability (indemnification, breach of confidentiality,
violation of intellectual property rights)?
-3 No
-1 No
0 Yes
Score
-5
-2
-1
Notes: It is fair for providers to limit liability for service failures. The provider does not control what you do with the service, and you
choose how much to spend on redundancy. There is a long commercial tradition of limiting liability in an infrastructure context where
risk might be large and margins are probably small (think telecom). Things get dicey when the providers extend the limits to nonservice issues or use these clauses to end-run the substantive promises they make in other sections of the contract.
•
“lost use” and “lost data”: these are part of the boilerplate for most standard commercial clauses eliminating consequential
damages. But these types of damages are not incidental where the subject matter of the contract is a service for managing
data. Shame on any cloud services provider who lists these types of damages in the laundry list of consequential damages
•
12 months of fees might be a reasonable liability cap if it’s based on a run rate, not actual dollars spent; without this concept
there is no real remedy for a breach that occurs in month 1
•
carve outs: an indemnification for third party claims that is limited to 12 months of fees paid is likely pointless; without
reasonable carve outs any provider commitment elsewhere in the contract is illusory
AWS
Azure
Compute Engine
11. We and our affiliates or licensors will not be liable
to you for any direct, indirect, incidental, special,
consequential or exemplary damages (including
damages for loss of profits, goodwill, use, or data),
even if a party has been advised of the possibility of
such damages. Further, neither we nor any of our
affiliates or licensors will be responsible for any
compensation, reimbursement, or damages arising in
connection with: (A) … (B) the cost of Procurement of
substitute goods or services; (C) any investments
expenditures or commitments by you in connection
with this Agreement or your use of or access to the
Service Offerings… In any case, our and our affiliates
and licensors’ aggregate liability under this
Agreement will be limited to the amount you actually
pay us under this Agreement for the Service that gave
rise to the Claim during the 12 months preceding the
claim.
7.a. The aggregate liability of each party under
this agreement is limited to direct damages up
to the amount paid under this Agreement for
the Services giving rise to that liability during
the 12 months before the liability arose, or for
Products provided free of charge, Five
Thousand Dollars ($5,000.00 USD).
13.1 To the maximum extent permitted by applicable
law, neither party, nor Google’s suppliers, will be
liable under this Agreement for lost revenues or
indirect, special, incidental, consequential,
exemplary, or punitive damages, even if the party
knew or should have known that such damages were
possible and even if direct damages do not satisfy a
remedy.
7.b. Neither party will be liable for indirect,
special, incidental, consequential, punitive, or
exemplary damages, or damages for lost
profits, revenues, business interruption, or loss
of business information, even if the party knew
that such damages were possible.
7.c. The limits of liability in this Section apply
to the fullest extent permitted by applicable law,
but do not apply to: (1) the parties’ obligations
under Section 6 or subsection 9(m); or (2)
violation of the other’s intellectual property
rights.
Note: language in agreements appears in ALL CAPS.
© Alice L. King, PLLC, 2014.
13.2 To the maximum extent permitted by applicable
law, neither party nor Google’s suppliers, may be
held liable under this Agreement for more than the
amount paid by Customer to Google during the
twelve months prior to the vent giving rise to liability.
13.3 These limitations of liability do not apply to
breaches of confidentiality obligations, violations of a
party’s Intellectual Property Rights by the other party,
or indemnification obligations.