Contract Terms to Know: Limitation of Liability

For the next few months,  we are doing a deep dive into specific contract terms so you will know why they are in the contract.

The limitation of liability is where a seller limits the kinds of remedies a buyer can get if the warranties or other parts of the contract are breached. 

Like the disclaimer provision, this is a place where the parties allocate the risk of a contract.  When things go wrong, this provision may limit your recovery if the other party to the contract breaches their obligations or provides deficient products or services.

They look like this: 

FOR ANY BREACH OF THE ABOVE LIMITED WARRANTY, COMPANY’S SOLE AND EXCLUSIVE REMEDY SHALL BE THE RE-PERFORMANCE OF THE SERVICES AS WARRANTED, AND IF CONTRACTOR FAILS TO RE-PERFORM THE SERVICES AS WARRANTED, COMPANY SHALL BE ENTITLED TO RECOVER THE FEES PAID FOR THE DEFICIENT SERVICES.

MANUFACTURER's maximum aggregate liability for damages to Customer hereunder shall not exceed the amount MANUFACTURER actually receives for the product furnished, or to be furnished, or services rendered, as the case may be, which is the subject of claim or dispute. Further, MANUFACTURER shall not be liable for any loss, damages, or penalty resulting from delay in delivery, no matter the cause.

 This provision also usually disclaims consequential damages, which we will discuss later.