Limitation of Liability Article

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A Limitation of Liability Article is a contractual article that specifies the extent to which each party to a contract is responsible for risks, damages, and liabilities arising from the agreement.

  • Context:
    • It can (typically) outline the specific liabilities for which a party is responsible and those from which a party is exempt.
    • It can (often) stipulate conditions under which these limitations apply, often clarifying that the limitations extend to direct and indirect liabilities.
    • It can range from being very narrow, focusing on specific types of damages, to very broad, covering nearly all conceivable liabilities.
    • It can specify the roles and obligations that fall under these limitations, distinguishing between individual/personal liabilities and those tied to the entity or role within the agreement.
    • It can help define the legal scope of responsibility, often clarifying the demarcation between professional and personal liability.
    • ...
  • Example(s):
    • An Article in a Trust Agreement that specifies that a trustee is acting in a specific capacity (e.g., Owner Trustee) and not individually, meaning their personal assets are not at risk for actions taken under the agreement.
    • A Service Agreement Article where a service provider limits liability to the amount paid for the services, excluding liability for consequential damages like lost profits or third-party claims.
    • ...
  • Counter-Example(s):
    • General Liability Clauses, which typically provide broad coverage for various liabilities without specific caps or exclusions.
    • ...
  • See: Risk Management Strategies, Contract Drafting Best Practices, Indemnification Clause.


References