Limitation of liability cap clauses, explained
The maximum amount you could owe the client if something goes wrong. With no cap, a $5,000 project can expose you to a claim for the client's lost profits, which can be orders of magnitude larger than what you were paid.
Market standard
Total liability capped at the fees paid under the agreement (or fees paid in the preceding 12 months for ongoing work). Both parties waive indirect, incidental, and consequential damages, including lost profits.
Red flags
- No limitation of liability clause at all
- Cap applies only to the client's liability, not the freelancer's
- Carve-outs so broad they swallow the cap (e.g. 'except for breach of this Agreement')
- Freelancer liable for consequential damages and lost profits
- Cap set at a multiple of fees (2x, 5x)
Suggested wording
Except for each party's indemnification obligations and breach of confidentiality, neither party's aggregate liability under this Agreement will exceed the total fees paid to the Provider in the 12 months preceding the claim. Neither party is liable for indirect, incidental, special, or consequential damages, or lost profits.
Check your actual contract
Paste your agreement into Gig Clause for a full clarity score, every flagged clause, and copy-paste suggested wording. Free, no account needed.
Review my contractIs this normal in…
- Limitation of liability cap in a design services agreement?
- Limitation of liability cap in a software / web development agreement?
- Limitation of liability cap in a marketing services agreement?
- Limitation of liability cap in a copywriting & content agreement?
- Limitation of liability cap in a video production agreement?
- Limitation of liability cap in a consulting agreement?
- Limitation of liability cap in a master services agreement (msa)?
Not legal advice. Gig Clause is software, not a law firm or a professional service, no attorney reviews, drafts, or is otherwise involved in anything it produces. It automatically highlights common contract issues and suggests negotiation language. Using it does not create an attorney-client relationship. For decisions with significant financial or legal consequences, consult a qualified attorney licensed in your jurisdiction. Clause standards vary by industry and location and change over time.