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Legal RiskAugust 13, 2026 · 6 min read
Understanding Limitation of Liability Clauses in Business Contracts
Uncapped liability can destroy a company. Discover how to negotiate reasonable mutual liability caps based on fees paid.
Limitation of liability clauses set the maximum dollar amount one party can recover from the other in legal disputes.
Standard Capping Terms
A standard position for service providers is capping total liability at the fees received under the agreement over the preceding 12 months.
Red Flag to Avoid
Beware of one-sided caps where the client limits their liability to $1,000 while leaving your liability completely uncapped.
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