An article by an IAPP contributor considers the evolution of liability caps in technology contracts mainly due to the impact of increasing data protection laws and regulations. The article highlights that liability caps were a standard and relatively simple contractual clause limiting financial exposure, while data protection concerns were treated as a secondary consideration.
However, in a few short years, the rise of data protection operations management as a critical business issue has significantly altered this landscape. In the era before the EU General Data Protection Regulation (GDPR), personal data breaches were often treated as a contractual risk covered by standard liability limitations. Today, liability caps are the subject of intense scrutiny, reflecting the increased costs of non-compliance and the severe consequences of personal data breaches.
The author concludes that organisations should adopt a proactive and informed approach to data protection contract negotiation to mitigate risks and build resilience to ensure successful technology partnerships.
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