Liability Limits

[CountryBoy]

When things go terribly wrong with your webhosting company what are the legal limits of your liability to your customers. I've been a customer care rep for a very long time and have had many customers call in to try to make exorbitant claims based on something that went wrong with our system. As far as I know you can't be liable for the value of the service you are giving. For example if your system is down for a day you cannot be held liable for more than one thirtieth of the monthly service charge. People will constantly try to claim lost business. Does someone here actually know the limits?

 

[ephasenetworks]

Its basically all written up on the TOS of what happens when service goes down.

Clients should read this and accept it.

 

[brianf]

There is no magic answer. You may have a provision in your TOS, however, if that provision is not in compliance with your state or local laws, it may be ineffective. Always remember that anyone can sue for anything and may be able to set a precedent that may seem contrary to existing laws that may seem to limit your liability.

That said, I'm sure many of the claims that are made are probably inflated. I'm sure people think that making threats will speed up any resolution.

Edit: I neglected to mention that the type of entity your company is may play a big part where personal liability is concerned.

 

[ldcdc]

Most TOS agreements limit compensation to the amount that the customer pays. That's often not enough to compensate for the damage, but then again, hosts are not insurance companies, even though customers would like them to act as such.

As brianf said, local laws are very important, which is why one should have a good lawyer look at the terms of service that will be used, to give the right amount of protection and to put you in guard to the risks that the law forces you to take.

 

[AbbieRose]

Really a good lawyer versed in internet laws should be able to stop any huge charge backs for compensation to you. If people have an internet business they need to be ready for situations where a site might go down. If they are not aware of how things are online then they shouldn't be going into business in that manner.

 

[HostingITrust]

Most terms and conditions ususally states that the company will not be held liable for lost business in any form.

Further, the amount of liability would also depend on the company status. If you are an individual you cannot be held liable for more than you have. If you are limited company you are liable not more than what the company has. Anyways laws will be different in US compared to India.