Limitation of Liability
A limitation of liability clause caps the maximum amount one party can be required to pay the other for damages arising from the contract.
How It Works in Contracts
These clauses protect parties from disproportionate financial exposure. They typically include a cap on total liability and exclusions for indirect, consequential, special, and punitive damages.
Examples
- Total liability capped at fees paid in the prior 12 months
- Exclusion of lost profits and business interruption damages
- Carve-outs for IP infringement and confidentiality breaches
