Liability Cap
/ˌlaɪəˈbɪləti kæp/
Definitions
- (n.) A contractual provision that limits the amount of damages one party can recover from another, thereby capping financial exposure.
The liability cap in the contract limited the vendor's damages to $100,000.
Related terms
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Commentary
Liability caps are key risk management tools in contracts; drafters should explicitly state the cap amount and consider exceptions for gross negligence or willful misconduct.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.