White Paper

Controlling Costs through Key Provisions in the Contract

 
A limitation of liability clause is a provision in a contract that limits the amount of exposure a company faces in the event a lawsuit is filed or another claim is made. Often, the parties will include a limitation of liability provision in the contract in an effort to either cap the amount of potential liability or to disclaim a certain type of liability, such as consequential damages. Most standard form contracts include similar limitations of liability provisions. The limit may apply to all claims arising during the course of the contract, or it may apply only to certain types of causes of action. Generally, limitation of liability clauses limit the liability to one of the following amounts: (1) the compensation paid under the contract; (2) a stipulated amount of money; (3) the amount available through insurance coverage; or (4) a combination of those above. These clauses are justified on the theory that they encourage commerce and sensible risk taking.

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Joel D. Heusinger is a Partner in the law firm of Woods & Aitken LLP. His practice focuses on construction law and litigation. He has been involved in the resolution of hundreds of millions of dollars in numerous complex construction disputes throughout the United States. Mr. Heusinger routinely lectures and writes articles on construction law.

Faculty

Joel D. Heusinger

Joel D. Heusinger

Woods & Aitken LLP