By Kristy Achey, Advanced Certified Paralegal
As a service provider, one of the most important clauses that should never be forgotten when negotiating a contract is Limitation of Liability. That limitation should be based on many factors including, but not limited to, governing laws, insurance limits and contract value. There should never be an unlimited liability associated with any contract and the negotiator should always push to have liability limited to actual damages.
Below are just a few considerations to be made when determining the Limitation of Liability language to be used:
Overall, the Limitation of Liability language should be reasonable, fair, equitable and in line with the services to be performed. See sample language below which is often acceptable to all parties involved.
In no event shall EITHER PARTY be liable for indirect, incidental, special, consequential, or punitive damages, or for direct damages in excess of the amounts paid by CLIENT for the services that gave rise to the liability, whether foreseeable or unforeseeable, of any kind whatsoever including, without limitation, loss of income, data or goodwill, information, downtime or costs, whether based on warranty, contract, tort (including negligence), product liability or otherwise, even if the OTHER PARTY has been advised of the possibility of such damage.
Disclaimer: This article provides general information and materials related to contract management. This article does not provide legal advice. Agile Contract Management is not a law firm nor does it provide legal advice. You should contact an attorney to obtain advice with respect to any particular legal issues or questions.