SESKStuff Everyone Should Know
SESK: Stuff Everyone Should Know · sesk.info/founder-liability-clause-limits

What does a limitation of liability clause try to do?

It allocates risk by limiting specified damages or exposure.

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  1. Guarantee no one can sue
  2. Erase every legal duty
  3. Limit defined contractual exposure ✔

Why: A limitation clause can cap or exclude defined liabilities, but it is not magic immunity. Enforceability and permitted exceptions vary by law, conduct, and contract type.

Huh, didn't know that: The federal example does not protect willful misconduct or lack of good faith by managerial personnel.

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Why did liability draw a line? It wanted a clear limit.
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References

Answer: Limit defined contractual exposure. A limitation clause can cap or exclude defined liabilities, but it is not magic immunity. Enforceability and permitted exceptions vary by law, conduct, and contract type.

  1. FAR 52.246-25 Limitation of Liability, Services www.acquisition.gov/far/52.246-25
    results from willful misconduct or lack of good faith on the part of any of the Contractor's managerial personnel
    Checked 2026-10-11.

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