How do I limit my liability to the fees paid?

Limit your risk with a liability cap equal to fees paid and no consequential damages. Sample clause plus the exact words to explain it to the client.

The risky clause

Contractor is liable for all direct, indirect and consequential losses of the Client, without limit.

Why it is dangerous

Liability for every loss means a mistake could cost far more than the project. A cap equal to fees paid, and an exclusion for indirect or consequential loss, are common protections. Insurance can cover the rest for higher-risk work. This is general information, not legal advice.

Safer clause to propose

Contractor's total liability shall not exceed the fees paid in the 12 months before the claim. Neither party is liable for loss of profit or indirect or consequential damages.

Message to send

Hi [Client],

Could we limit liability to the fees paid under this agreement and exclude indirect losses? This is standard for services contracts of this size. Thanks, [Your Name]

Frequently asked questions

What is a consequential loss?

Losses that flow indirectly from a breach, such as lost profits or business interruption.

Will clients accept a liability cap?

Often yes, especially if the cap is not too low. Explain it is standard practice.

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