Find the liability cap in a contract and what falls outside it
A limitation of liability clause caps how much one party can recover from the other and usually rules out certain kinds of loss altogether, such as indirect or consequential damages. The cap is only half the story: carve-outs decide which claims escape it. Ask Search+ "What is the liability cap in this agreement, and which claims are excluded from it?" and the answer cites the cap, the exclusions and the carve-outs so you can read how they fit.
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Last updated October 2026
How to read a liability cap with Search+
- Upload the contract and the fee schedule
Caps are often expressed as a multiple of fees paid or payable over a period, which means the fee schedule or order form matters too. Put them in one workspace so you can ask how the cap is calculated.
- Ask about the cap, the exclusions and the carve-outs separately
Ask what the overall cap is, then which types of damages are excluded, then which claims are subject to neither. Each part is usually a separate sentence or subsection with its own conditions.
- Cross-check with indemnities and special caps
Open the citations and ask whether indemnities are inside or outside the cap, and whether there is a separate, higher cap for particular risks such as data breaches.
Questions to ask about limitation of liability
What is the most either party can recover under this agreement, and how is that amount calculated?
Does the contract exclude indirect, consequential or special damages, and does it exclude lost profits?
Which liabilities are not limited at all, for example fraud, gross negligence or breach of confidentiality?
Is there a separate cap for data protection claims or for indemnities?
Does the cap apply equally to both parties, or only to the supplier?
Across the vendor agreements in this workspace, how is the liability cap calculated in each one?
What to look for in a limitation of liability clause
Caps are commonly a fixed amount, a multiple of fees, or the fees paid over a recent period. Check the period and whether it counts fees paid or fees payable, because that changes the number.
Many clauses exclude indirect or consequential loss and sometimes named items such as lost profits or lost data. What counts as indirect loss can depend on the governing law, so the exact list matters.
Liabilities often left uncapped include fraud, willful misconduct and death or personal injury caused by negligence, and sometimes confidentiality breaches or indemnities. Some of these cannot be limited under certain laws.
Some contracts set a separate, higher cap for particular risks, such as data protection breaches. Check whether it sits on top of the general cap or within it.
A cap that protects only one party is common in standard supplier terms. Ask whether each limit applies to both sides.
Every Search+ answer includes citations you can open to read the excerpt. AI answers can be incomplete, so read the full cap and carve-out wording before you depend on it.
Liability wording and what it usually signals
| Wording you may see | What it usually signals | A follow-up question |
|---|---|---|
| "in no event shall either party's aggregate liability exceed" | An overall cap | What amount or formula sets the cap? |
| "fees paid or payable in the twelve months preceding the claim" | A cap tied to recent fees | Which fees count toward the cap, and over what period? |
| "indirect, incidental, special or consequential damages" | Excluded categories of loss | Are lost profits or lost data excluded too? |
| "nothing in this agreement limits liability for" | A list of uncapped liabilities | Which liabilities are fully outside the cap? |
| "except for breach of confidentiality or indemnification obligations" | Specific claims outside the general cap | Do these excluded claims have a cap of their own? |
| "to the maximum extent permitted by law" | The limits apply only as far as the law allows | Does the contract name anything the law prevents it from limiting? |
What is a limitation of liability clause?
A limitation of liability clause is a contract term that caps the amount of damages a party can be required to pay and often excludes certain types of loss, such as indirect or consequential damages, from recovery altogether.
Limitation of liability questions
Can Search+ find the liability cap and its exceptions?
Can it work out the cap amount for me?
Does the cap cover indemnities?
Will it notice a cap that protects only one side?
Can I see how caps compare across several contracts?
Is this a legal opinion on whether the cap is enforceable?
Know the ceiling on what you can recover
Start a workspace, upload the contract, and ask what its liability cap leaves out.
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