Mark Fry and Wendy Hederman

The firm has announced the results of its fourth annual survey on market practice for commercial contracts, which received input from close to 150 in-house lawyers from both the public and private sector focused on common contractual issues when negotiating commercial transactions.

The results showed that liability for data privacy breaches remains a key contractual concern, although there is a mismatch between supplier and customer expectations.

More than two-thirds (68 per cent) of customers said they ask for uncapped liability for data protection law breaches in all or most circumstances when negotiating a contract with a supplier.

However, 66 per cent of suppliers said they would not be prepared to take on uncapped liability, although 27 per cent said that they may concede a higher cap. Just 34 per cent said that they would always or sometimes concede.

Mark Fry, partner at Mason Hayes & Curran, said: “A cap on liability is a contractual clause that limits the amount that a party is liable for, in the event of a breach of contract or other problem arising.

“The results highlight that negotiations around the extent of a supplier’s liability for data protection law breaches can still be contentious, even five years after the introduction of the General Data Protection Regulation (GDPR).

“What we are seeing in the market is a trend towards a higher cap, rather than uncapped liability, for GDPR liabilities.”

The survey also showed that suppliers and customers have different concerns around contracting to use artificial intelligence (AI). For suppliers, infringement of intellectual property rights was the top concern, whereas customers are most concerned about regulatory compliance, followed closely by privacy concerns.

When asked if their standard contracts committed their organisation to environmental, social and governance (ESG) compliance obligations, there was again a mismatch between supplier and customer responses, with 56 per cent of customers saying yes and 61 per cent of suppliers saying no.

For suppliers, the ESG area of biggest concern is health and safety, followed by ethics, whereas for customers, climate change took top billing, with ethics also in second place.

Wendy Hederman, commercial partner at Mason Hayes & Curran, said: “We are seeing a sharper focus on ESG in supply chains, with the market moving from a softer approach to one where there are binding contractual obligations on ESG, and contractual consequences for breach.

“The introduction of the new Corporate Sustainability Reporting Directive will require companies to report on the environmental impact across the company’s supply chain, meaning an increase in the monitoring of sustainability datapoints for businesses and their suppliers.”