Browse Definitions :
Definition

limitation of liability clause

Contributor(s): Ivy Wigmore

A limitation of liability clause (sometimes referred to simply as a liability clause) is the section in a contracted agreement that specifies the damages that one party will be obligated to provide to the other under terms and conditions stipulated in the contract.

In a legal context, a liability is generally a responsibility to compensate for some failure to perform according to an established or agreed-upon stipulation. Because there is an element of risk inherent in most business agreements, limitation of liability clauses are common in all areas of contract law.

In IT, limits of liability clauses are typically written into contracts between any two parties, including distribution agreements,  software license agreements and service-level agreements. In a software license agreement, for example, the limitation of liability is one of the most important clauses because it limits the amount and types of damages one party can recover from the other party. For example, if the software doesn't work and the company suffers damages as a result, the limitation of liability will restrict the company's ability to recoup its loss.

Because a limitation of liability clause typically favors whichever party drafted the agreement -- usually the vendor -- it's particularly important to negotiate that part of the contract after careful consideration. 

 

This was last updated in June 2014

Continue Reading About limitation of liability clause

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

SearchSecurity

  • cybersecurity

    Cybersecurity is the protection of internet-connected systems, including hardware, software and data, from cyberattacks.

  • asymmetric cryptography (public key cryptography)

    Asymmetric cryptography, also called public key cryptography, uses a pair of numerical keys that are mathematically related to ...

  • digital signature

    A digital signature is a mathematical technique used to validate the authenticity and integrity of a message, software or digital...

SearchHealthIT

SearchDisasterRecovery

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

  • disaster recovery team

    A disaster recovery team is a group of individuals focused on planning, implementing, maintaining, auditing and testing an ...

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

SearchStorage

  • hard disk drive (HDD)

    A computer hard disk drive (HDD) is a non-volatile memory hardware device that controls the positioning, reading and writing of ...

  • byte

    In most computer systems, a byte is a unit of data that is eight binary digits long. Bytes are often used to represent a ...

  • network-attached storage (NAS)

    Network-attached storage (NAS) is dedicated file storage that enables multiple users and heterogeneous client devices to retrieve...

Close