Clauses
A clause that caps how much one party can be required to pay the other if something goes wrong.
A limitation of liability clause sets a ceiling on damages. It caps the total amount one party can recover from the other (often at the fees paid under the contract, or some multiple of them) and frequently excludes certain categories of damages entirely, such as lost profits or other indirect losses.
This clause is one of the most negotiated parts of any commercial contract because it decides who carries the downside when things break. Read it next to the indemnification clause, since carve-outs in one can undo the cap in the other.
Related terms
A promise by one party to cover the other's losses or legal costs if certain things go wrong.
A fixed amount the parties agree in advance will be owed if the contract is breached.
Statements of fact each party makes and stands behind, which the other relies on in signing.
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