Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Corporate CounselorFeaturesKickerLJN NewslettersNewsSections

Vendor Limitations of Liability for Security Breaches

By Bryan G. Handlos and L. Elise Dieterich
August 02, 2015

Counsel advising companies on vendor contracts are in a tough spot. Cybersecurity risks presented by data outsourcing demand increasing attention and resources. At the same time, outsourcing of data to third-party vendors has become, in many instances, a business necessity. The biggest companies may be able to afford the costs to address these risks. One of the biggest banks, for instance, has reportedly established a 1,000-person digital security team (larger than Google's) near NSA headquarters ' staffed with ex-military talent and a $250 million budget. Most companies, however, have to face cybersecurity risks with something less, and many are relying on vendors whose resources and cybersecurity sophistication may (or may not) outstrip that of the company.

But, when a security breach at the vendor occurs, will those resources and sophistication really mean anything? A vendor's contractual limitation of liability provisions can easily deprive a company of any meaningful recovery. A famous politician once criticized something he didn't much like (government, not vendors) as “a big baby ' an alimentary canal with a big appetite at one end and no responsibility at the other.” What should a vendor's back-end responsibility be?

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs Image

A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.

Blockchain Domains: New Developments for Brand Owners Image

Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.

Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Coverage Issues Stemming from Dry Cleaner Contamination Suits Image

In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.