The tenderer discovers that information about its bid has been leaked and successfully sues Agency Y for breaching confidentiality. Liability for personal injury and loss of, or damage to, tangible property, and liability under an indemnity, will not be limited. Per event' means that the cap on liability will apply for each breach of the contract or a series of related breaches. Hence, as the risk can be easily transferred to a commercial insurer, limiting liability in these areas would be inappropriate. It is prudent business practice for parties to assess the risk allocated to them under the draft contract.
Risk assessment involves identifying what, how and why things go wrong.
Identified risks can then be analysed to determine the likelihood and consequences of the risk occurring. Evaluation of the risks results in a prioritised list of risks to be treated by risk management strategies. Risk management strategies should be devised to appropriately manage risk prior to negotiating the final contract and the final contract price. Commonwealth may accept risk by issuing a detailed work specification where it has the technical expertise avoiding the risk eg. transferring all risk to another party, or not proceeding with the transaction. A proposal to limit liability via a tender or during contract negotiations is an example of a strategy to transfer risk.