7ALimiting and channeling liability under offshore construction contracts in Norway

1 The problem

The purpose of this chapter is to investigate means and boundaries for regulating two types of liabilities arising from contractual relationships: liability for default and liability for physical damage caused in connection with the work under the contract. The basis for these analyses lies within agreed Norwegian standard conditions of contract for major offshore construction projects.1 Such projects involve lengthy contract periods, huge costs and complex deliveries due to the extensive research and development often required. Therefore, they normally carry the risk that the contractor is not able to fulfill all of his contractual obligations, thus exposing him to broad liability for contractual breach – potentially exceeding his financial capabilities. As such exposure is not considered to be efficient or rational, the parties agree on some kind of limitation to this exposure. This is illustrated by offshore construction contracts.2