Liability
Legal responsibility for one's actions or omissions that cause harm or loss to another party.
In contracts, liability clauses define the extent of financial responsibility each party assumes. Limitation of liability clauses cap the amount one party can be held responsible for, while exclusion clauses attempt to remove liability entirely for certain types of damages.
Courts may refuse to enforce overly broad liability exclusions, particularly for gross negligence or intentional misconduct. Understanding liability allocation is crucial when negotiating contracts.
Example
A SaaS provider limits its liability to the total fees paid by the customer in the preceding 12 months.
Related Terms
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