Limitations of liability

A "Limitations of Liability" clause specifies the extent to which a party is responsible for damages or losses in a contract, often capping the maximum liability or excluding certain types of damages like incidental or consequential damages. This clause aims to protect parties from extensive financial exposure and provides clarity on the risks involved in the contractual agreement.

15 Limitations of liability examples

  • Description
    Limitations of Liability. Neither Party shall be liable to the other for consequential, incidental, indirect, punitive or special damages (including loss of profits, data, business or goodwill), regardless of the legal theory advanced or of any notice given as to the likelihood of such damages, excluding only third party damages indemnifiable under Section 9(a)(if any). The Riveron Parties shall not be liable to the Company, or any party asserting claims on behalf of the Company or otherwise, including, without limitation, any of the Company’s equity holders, for any Loss except for direct damages found in a Final Judgment to be the direct result of Riveron’s gross negligence or willful misconduct. The collective liability of the Riveron Parties, if any, in relation to the Agreement or the Services shall be limited in amount to the fees actually paid to Riveron by the Company for the Services. The parties acknowledge that the limitations set forth above are integral to the amount of fees charged in connection with the Services, and that were Riveron to assume any further liability, such fees would of necessity be set substantially higher.
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    Summer Infant, Inc.
  • Description
    Limitations of Liability. Except in the case of willful misconduct, gross negligence or fraudulent behavior, in no event shall either Party or its respectful affiliates be liable to the other Party or its respective affiliates for any special, indirect, incidental, consequential or exemplary damages, including without limitation, lost savings, lost profits or other economic loss, or loss of records or data, as a result of or arising out of this Agreement, the provision of Services hereunder or any other matters relating to or arising from this Agreement, whether such claim be in tort, contract or otherwise and whether or not the possibility of such damages was reasonably foreseeable or disclosed.
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    PaxMedica, Inc. (PXMD)
  • Description
    Limitations of Liability. Roanoke Gas shall not be liable to Contractor for any indirect, consequential, or special damages, including for loss of profits, arising out of or related to Roanoke Gas’s breach of any of its obligations under this Agreement.
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    RGC RESOURCES INC (RGCO)
  • Description
    Limitations of Liability. 10.1. Exclusion of Damages. Except for a breach of a party’s obligations under Section 7 (Confidentiality) and notwithstanding any terms in a Covered Solutions SOW to the contrary, neither party shall be liable under this Agreement or any Covered Solutions SOW for any indirect, incidental, special, consequential or punitive damages, or damages based on lost revenue, lost profits, loss of income, or loss of business advantage damages, in all cases whether or not foreseeable, even if such party has been advised of the possibility of such damages.   10.2. Applicability. The limitations of liability stated in this Section 10 will apply regardless of whether a party’s remedies in this Agreement are determined to have failed of their essential purpose.
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    VMWARE, INC.
  • Description
    Limitations of Liability. In no event shall MAV or any of its affiliates or licensors be liable under this Agreement and/or in connection with its subject matter, regardless of the theory of liability, whether arising in contract, tort or otherwise, for any of the following: (A) Any consequential, incidental, indirect, special, punitive or exemplary damages; and/or (B) Any amounts that, in the aggregate, exceed [***]. Without limiting the generality of the foregoing limitations of liability, in no event shall MAV or any of its Affiliates other than Scaled, have any liability whatsoever with respect to any services performed by Scaled or deliverables by Scaled to Virgin pursuant to any other agreement.  
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    Social Capital Hedosophia Holdings Corp. (SPCE)
  • Description
    Limitation of Liability. Subject to Section 21.2, neither party will be liable under this Agreement for lost revenues or indirect, special, incidental, consequential, exemplary, or punitive damages, however caused and under any theory of liability, including but not limited to contract or tort (including product liability, strict liability, and negligence), even if the party knew or should have known that such damages were possible and notwithstanding the failure of essential purpose of any remedy stated herein.  
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    IAC/InterActiveCorp (IAC)
  • Description
    Limitations of Liability of the Adviser. Invesco PowerShares Capital Management shall not be liable for any error of judgment or mistake of law or for any loss suffered by any Fund, the Trust or any of its shareholders, in connection with the matters to which this Agreement relates, except to the extent that such a loss results from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. Any person, even though also an officer, director, employee, or agent of Invesco PowerShares Capital Management, who may be or become an officer, Board member, employee or agent of the Trust shall be deemed, when rendering services to any Fund or the Trust or acting with respect to any business of such Fund or the Trust, to be rendering such service to or acting solely for the Fund or the Trust and not as an officer, director, employee, or agent or one under the control or direction of Invesco PowerShares Capital Management even though paid by the Adviser. Limitation of Liability of the Trust. Invesco PowerShares Capital Management is expressly put on notice of, and hereby acknowledges and agrees to, the limitation of shareholder liability as set forth in the Declaration of Trust of the Trust and agrees that the obligations assumed by the Trust under this contract shall be limited in all cases to the Trust and its assets. Invesco PowerShares Capital Management shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Trust, nor shall Invesco PowerShares Capital Management seek satisfaction of any such obligation from the Trustees or any individual Trustee of the Trust. Invesco PowerShares Capital Management understands that the rights and obligations of each series of shares of the Trust under the Declaration of Trust are separate and distinct from those of any and all other series.
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    Invesco Actively Managed Exchange-Traded Commodity Fund Trust
  • Description
    Limitations of Liability. To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of the State of Delaware is hereafter amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended.
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    Xtant Medical Holdings, Inc. (XTNT)
  • Description
    Limitations of Liability: In no event will Life Time be liable for indirect, incidental, punitive, exemplary, special or consequential damages, whether in contract or tort, even if Consultant has been advised of the possibility of such damages. Consultant acknowledges and agrees that the above limitations of liability are reasonable.   In no event will Consultant be liable for indirect, incidental, punitive, exemplary, special or consequential damages, whether in contract or tort, even if company has been advised of the possibility of such damages. Company acknowledges and agrees that the above limitations of liability are reasonable.
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    Life Time Group Holdings, Inc. (LTH)
  • Description
    Limitation of Liability. In no event shall Tenant or HSMG be liable to Developer for any indirect, special, incidental, consequential, or punitive damages, including, without limitation, loss of profits or goodwill, for any matter arising out of or relating to this agreement, its subject matter, or performance hereunder, whether such liability is asserted on the basis of contract, tort (including negligence) or otherwise, even if such party has been advised of the possibility of such damages. Tenant and HSMG’s total liability for any cause of action, claim, damages, fees, costs, or expenses under this agreement shall be limited to $3 million US dollars. Developer’s total liability for any cause of action, claim, damages, fees, costs, or expenses under this agreement shall be limited to the greater of $3 million US dollars or the amounts paid by Tenant or HSMG to Developer in connection herewith during the twelve (12) months immediately preceding the date on which the claim at issue arose. Each party acknowledges and agrees that this section represents a reasonable allocation of risk and that, in the absence of these limitations of liability, the terms of this agreement would be substantially different. The parties acknowledge that this liability cap does not apply to leases and project agreements hereunder, which shall have their own limitations of liability set forth therein.
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    Healthcare Solutions Management Group, Inc.
  • Description
    Limitations of Liability. Except as specifically set forth herein, neither Party shall be responsible to the other for any special, indirect, or consequential damages.  
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    Triangle Canna Corp.
  • Description
    The execution and delivery of this Agreement has been duly authorized and signed by an authorized officer of each Co-Administrator, acting as such, and neither such authorization by the Board of Trustees of the Trust nor execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, and the obligations of this Agreement are not binding upon any of the partners or officers of either Co-Administrator or any of their respective affiliates.
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    COMMERCE FUNDS
  • Description
    Limitations of Liability and Indemnification: As permitted by the Delaware General Corporation Law, as amended, our amended and restated certificate of incorporation and amended and restated bylaws, in each case, limit or eliminate the personal liability of our directors. Consequently, a director will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for: any breach of the director’s duty of loyalty to us or our stockholders; any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;  any unlawful payments related to dividends or unlawful stock repurchases, redemptions or other distributions; or  any transaction from which the director derived an improper personal benefit. 
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    CytomX Therapeutics, Inc. (CTMX)
  • Description
    Limitations of Liability. (a) To the fullest extent permitted under applicable law, a party’s maximum, cumulative, and sole liability to the other party for any claim or cause of action arising out of this agreement, the services, acts or omissions of the recipient and its affiliates, or the acts or omissions of the provider, its affiliates, and their third-party providers in connection with this agreement shall not exceed the fees paid by the recipient to the provider under this agreement during the twelve (12) month period immediately preceding the first such claim or cause of action. However, this limitation does not apply to any indemnification obligation described in Section 5.3(a)(iii). Additionally, if a party's liability under this agreement relates to data privacy or cybersecurity, and that party, using commercially reasonable efforts and acting in good faith, is able to recover an amount greater than the stated liability cap from its applicable third-party service providers, it shall pass a pro-rata portion of such excess recovery to the other party (based on the relative amount of such liability compared to the damages suffered by the liable party for which the recovery is obtained). Notwithstanding anything to the contrary in this agreement, to the fullest extent permitted under applicable law, neither party nor its affiliates, nor the third-party providers (solely with respect to the provider), shall be liable for punitive, incidental, consequential, special, or indirect damages, or damages calculated based on lost profits, loss in value, or multiple of earnings. Any claim or cause of action requesting such damages is specifically waived and barred, whether or not such damages were foreseeable or a party was notified in advance of the possibility of such damages. Furthermore, any damages payable by a party under this agreement shall be net of any amounts recovered by the other party under applicable insurance policies or from any other entity alleged to be responsible. (b) Without limiting any other responsibilities of the recipient, the recipient acknowledges that, notwithstanding any services provided by the provider under this agreement, it retains full responsibility for reviewing all work products and deliverables provided by the provider related to the recipient’s or any affiliate’s internal controls, books and records, regulatory compliance (in any jurisdiction), disclosures, or financial statements. The provider assumes no responsibility or liability in respect of these areas, including their effectiveness, accuracy, completeness, or the reasonableness of any estimates or projections included therein. For the avoidance of doubt, notwithstanding anything to the contrary in this agreement, the provider shall have no liability for any claim or cause of action relating to (i) the effectiveness, accuracy, or completeness of the internal controls or books and records of the recipient or its affiliates, or (ii) the accuracy or completeness of disclosures or financial statements provided by the recipient or its affiliates to any investor or other person, or the reasonableness of any estimates or projections included therein.
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    DESRI Inc.
  • Description
    Limitations of Liability. Except as specified herein, each party shall indemnify, defend and hold harmless the other party, its parents, subsidiaries, affiliates, and their respective officers, directors, members, employees and agents from and against any and all third party demands for losses, claims, actions, damages, liabilities, costs and expenses, including reasonable attorney fees, directly related to or arising from injuries to persons, tangible, intangible or real property to the extent caused by the negligence or willful misconduct of a party. A party’s indemnity and hold harmless obligations as to any claim or suit within the scope of this clause shall be reduced to the extent of any concurrent fault, failure to mitigate damages or negligence by the other party. Other than as specified herein, the Consultant provides no warranty and is not liable for any consulting advice. Although Consultant, based upon experience, will attempt to assist the Company, Consultant is not liable for any such assistance unrelated to services rendered.. If such claim is made, the Indemnifying Party, at its expense shall defend against and pay any and all costs, expenses, including reasonable fees of attorneys and other retained professionals or consultants and damages of any kind arising out of such claim, whether or not that claim is successful, provided that the indemnified party: (a) gives the Indemnifying Party prompt written notice of such claim, and (b) cooperates with the Indemnifying Party, at the Indemnifying party’s expense, in the defense of such claim. The Indemnifying party shall not be responsible for any settlement made by the Indemnified party without the Indemnifying party’s prior written consent. The maximum liability of Consultant is the amount paid for the specific work done or not done which was billed in the preceding sixty days. No punitive damages shall be awarded against either party.
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    Docola, Inc.

What is Limitations of Liability?

Limitations of liability are clauses in contracts that specify the extent to which a party will be held liable for damages or losses incurred by the other party. These clauses serve to cap, exclude, or limit the amount or types of damages one party can recover from another in the event of a breach of contract or other issues. This is an essential risk management tool used to protect parties against unforeseen liabilities.

When Should I Use Limitations of Liability?

Limitations of liability should be used in any contract where there is a potential risk of significant liability or damages. Common scenarios include:

  • Commercial Contracts: To mitigate the potential financial impact of breaches or failures to meet contractual obligations.
  • Software Licenses: To limit liability in cases of software failure or data loss.
  • Service Agreements: To protect service providers from excessive claims related to service disruptions or failures.
  • Partnership Agreements: To manage and allocate risks between partners effectively.

Employing limitations of liability can provide clarity and predictability for both parties and help maintain balance in the contractual relationship.

How Do I Write Limitations of Liability?

When drafting a limitations of liability clause, consider the following guidelines:

  • Clear Language: Use straightforward and unambiguous language to articulate the limitations.
  • Scope of Limitation: Clearly define what types of liabilities are covered, such as direct, indirect, consequential, or punitive damages.
  • Cap on Damages: Specify a maximum dollar amount for potential damages, if applicable.
  • Exclusions: Identify any specific liabilities or circumstances that are excluded from the limitation.
  • Mutual Agreement: Ensure that both parties understand and agree to the limitations as presented.

Example: “Neither party shall be liable for any indirect, incidental, special, consequential, or punitive damages, including loss of profits, revenue, data, or use, incurred by the other party, whether in an action in contract or tort, even if the party has been advised of the possibility of such damages. The liability for damages under this agreement shall not exceed the total fees paid by the client to the service provider during the preceding twelve months.”

Be aware of any legal requirements or limitations imposed by jurisdictional laws when drafting these clauses.

Which Contracts Typically Contain Limitations of Liability?

Limitations of liability clauses are commonly found in a variety of contracts, including but not limited to:

  • Technology and Software Agreements: Licensing, SaaS, cloud services, and IT services contracts.
  • Employment Contracts: Particularly in agreements with executives or high-level employees.
  • Supply and Distribution Agreements: To manage and allocate risks between suppliers and distributors.
  • Consulting and Professional Services Agreements: To limit the liability of consultants or professionals providing services.
  • Construction Contracts: To manage liability among parties involved in construction projects.

By including limitations of liability in these contracts, parties can better manage their exposure to potential risks and ensure that liabilities are kept within agreed-upon boundaries.

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