Clause 2. In any other case, you are liable for whatever damage your software causes when used normally.
This is too broadly stated. Define "when used normally". If the purpose is well-defined and performance is agreed to by spec via signed contract, then yes Clause 2 is fine. Now let's go into the real world shall we?
In the real world software is continually modified, changed, enhanced, etc. Thus "when used normally" is difficult to nail down.
A glaring omission of this software liability discussion is the area of software testing and, even further, software certification. The bottom line here is that such a simplistic treatment of software in terms of product liability is doomed.
"Say yur prayers, yuh flea-pickin' varmint!" -- Yosemite Sam