A limitation of liability clause caps the maximum amount one party can recover from the other for damages. While these clauses provide predictability, they can leave you without adequate recourse if things go wrong.
“IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES. THE TOTAL LIABILITY OF PROVIDER UNDER THIS AGREEMENT SHALL NOT EXCEED THE FEES PAID BY CUSTOMER IN THE TWELVE (12) MONTHS PRECEDING THE CLAIM.”
This limits what you can recover if the provider fails. You can't get damages for lost profits or business opportunities, and the maximum you can recover is limited to what you paid in the last year - even if your actual losses are much greater.
Excludes consequential damages like lost profits or business interruption
Low liability caps that don't reflect potential damages
One-sided limitations that only protect one party
Carve-outs that allow unlimited liability for certain breaches
May not apply to gross negligence or willful misconduct
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An indemnification clause requires one party to compensate the other for certain losses, damages, or legal costs. These clauses can expose you to significant financial risk if not carefully reviewed.
A termination clause defines how and when a contract can be ended by either party. Understanding these terms is crucial - they determine your ability to exit a bad situation and what happens when you do.
A force majeure clause excuses parties from performing their obligations when extraordinary events beyond their control occur, such as natural disasters, wars, or pandemics. These clauses became critical during COVID-19.