Liability reform: the rational analysis

摘要

The raging debate on liability reform highlights a number of alternative approaches. 1. Repeal s310 of the Companies Act 1985, thereby permitting companies and their auditors to agree a contractual liability cap in respect of auditing failures. This would allow firms to include audits in the range of services whose engagement terms have for many years incorporated liability caps -either as an absolute ceiling of, say, ￡1 m or other sum below the limit of insurance indemnity, or a formula based on a multiple of fees/client turnover/deal size, or whatever.