Risk Allocation Clauses In Modern Commercial Contracts
- IJLLR Journal
- Jul 19
- 1 min read
Jayant Bhardwaj, OP Jindal Global University
ABSTRACT
Now commercial contracts are no longer limited to dealing with disputes after a breach has occurred. Instead, they are drafted to manage risk in advance by clearly allocating responsibility for loss, liability, and enforcement. Clauses such as indemnity, limitation of liability, liquidated damages and de minimis play an important role in this process by deciding who bears the risk, how much can be claimed and when a claim may arise. These clauses are unavoidable in sectors such as technology licensing, infrastructure and construction, mergers & acquisitions, joint ventures, and service agreements, where contracts involve substantial financial exposure, performance obligations, regulatory scrutiny, and commercial uncertainty. In such transactions, parties depend of these clauses to allocate risk in advance, contain liability, and ensure that potential breaches do not undermine the commercial viability of the arrangement. This paper provides the importance and relevance of these clauses and explains their role in shaping risk allocation in commercial contracts under Indian law.
