This clause says the other party cannot be held liable for damages if they deliberately break the contract—they can only be sued for "wilful default" (intentional breach) in very limited circumstances, if at all. This is extremely one-sided because it removes the main incentive for someone to keep their promises; they know they can break the contract on purpose and face almost no consequences. Most courts in the UK and US will not enforce a clause that lets someone escape liability for intentional wrongdoing, because it violates basic contract principles and public policy (the law's view of what's fair to society).
Do not accept this clause under any circumstances. If the other party insists on limiting liability, that's fine—but never agree to exclude liability for intentional breach or fraud. If they won't remove this language, walk away from the deal; a party that wants to protect themselves from the consequences of deliberately breaking promises is a serious red flag.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause says the other party cannot be held liable for damages if they deliberately break the contract—they can only be sued for "wilful default" (intentional breach) in very limited circumstances, if at all.
Why should I care about this clause?
This is extremely one-sided because it removes the main incentive for someone to keep their promises; they know they can break the contract on purpose and face almost no consequences.
What are my options?
Most courts in the UK and US will not enforce a clause that lets someone escape liability for intentional wrongdoing, because it violates basic contract principles and public policy (the law's view of what's fair to society).