Glossary → Contracts
Contracts

Limitation of Liability

A ceiling on how much one party can be made to pay.

A limitation-of-liability clause caps the maximum amount a party can owe if something goes wrong — often limited to the fees paid, or excluding certain damages entirely. Watch for caps that are tiny relative to the risk, or that protect only one side. An uncapped liability on your side is a major red flag.

In practice

“In no event shall liability exceed the fees paid in the prior 12 months.” — caps the vendor’s exposure to one year of fees, no matter the damage.

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