Liability Cap
A liability cap is a contract clause that limits the total amount one party can be required to pay the other if something goes wrong.
In short
- Sets a ceiling on how much a vendor or client can be forced to pay in damages.
- Usually a multiple of fees paid (e.g. 12 months) or a fixed dollar amount.
- Almost always has carve-outs -- categories that stay uncapped.
- One of the highest-impact clauses to check in a SOW or MSA.
What it covers
A liability cap (or "limitation of liability") applies to general damages -- lost profits, delays, rework costs. It doesn't erase risk, it bounds it: without a cap, a party can in theory be sued for the full extent of a loss, however large.
Why the carve-outs matter
Most caps exclude specific categories -- confidentiality breaches, gross negligence, willful misconduct, IP infringement, indemnification obligations. An uncapped category can swallow the protection the cap was meant to provide, so the carve-out list matters as much as the cap amount.
How ScopeWise checks this
ScopeWise's Commercial agent checks every SOW for the presence, amount, and carve-out structure of liability caps, flagging missing or unusually asymmetric caps as a finding.