What is the default liability without a contract or clause?


Was just curious about this. With Intellectual Property, if there is no contract and you are a contractor, all the work you create is owned by the creator by default.

How does liability work though? If there is no contract, or no liability clause in the contract, are you liable?

I guess what I'm trying to get at is, whether it's better to have no liability clause at all, or whether you are better off having a liability clause. If you have a clause that indemnifies you I imagine that is probably better, but I'm not sure.

p.s. Just asking for thoughts on this, I understand that I should check with a lawyer.

p.p.s I also understand that this probably varies per country

Legal Legal Documents Liability

asked Dec 8 '11 at 09:51
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1 Answer


Here is a US focused answer. Let's assume you have a contract without any clauses relating to liability (if there is not a signed contract there is likely at least some kind of oral contract so it amounts to mostly the same thing). In this situation, your only liability is for breach of contract, ie, if you don't keep up your end of the bargain.

There is one catch though. In US law, there are implied warranties. These are presumed to be in the contract, so if you don't satisfy them, you could breach the contract. Furthermore, warranties may require you to indemnify the other party if you breach the warranty. Many contracts explicitly disclaim implied warranties, and it is perfectly fine to do this.

Sometimes, for clarity, contracts may contain explicit indemnification clauses. These clauses say that when a person fails to do something, they must pay money to make the other party "whole", meaning paying enough money to fully remedy the failure. Generally, to minimize your liability, you want the other party to indemnify you and you don't want to indemnify the other party.

answered Dec 8 '11 at 11:27
1,936 points
  • Thanks for a really good, well written answer Jeff. Don, that sounds like good advice as well - my currently client doesn't want to negotiate the liability, but they are going to have to if they want me to work for them. – Roger 10 years ago
  • Yeah, I understand that clients want to protect themselves, but that's why they write Software License Agreements and such, so they are protected from their own clients and they shouldn't need the contractor to have liability. I was trying to explain to them that it's not reasonable for me to be liable for a work that they are going to modify, and use however they want (it's also in the contract that they use use the work however they want). Luckily most of the people at the company agree with me, it's just their lawyer who doesn't have experience with software contracts. – Roger 10 years ago

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