Limitation of liability clauses

A cap limits total liability, often to fees paid in some preceding period. An exclusion of consequential damages removes whole categories of loss, typically lost profits, lost business and reputational harm, whatever the cap says.

The second frequently matters more than the first. In a supply dispute, most of the real loss is exactly the kind the exclusion removes: the margin that was not earned because the goods could not be sold.

Certain categories are commonly excluded from the cap: indemnity obligations, breaches of confidentiality, and in many agreements fraud or willful misconduct. The scope of those carve-outs, and whether they are mutual, changes the practical effect of the whole clause.

A cap that survives everything is a very different instrument from one with meaningful carve-outs.

A limitation clause interacts with the remedy provisions elsewhere. A contract with no refunds, a short notice window and a low cap has, in combination, allocated nearly all risk to one side, even though each clause on its own looks ordinary. That combined reading is the exercise worth doing before signature, and it is the pattern examined in notice windows compared.