liability caps

Liability caps are limits set in contracts that specify the maximum amount one party has to pay if something goes wrong or causes damage. They protect organizations from unexpected large financial losses by defining a ceiling on their legal or financial responsibility. This helps in risk management, ensuring that damages don’t exceed a certain threshold, even if the actual harm or losses are much larger. Liability caps are common in service agreements, warranties, or contractual disputes, providing clarity and financial predictability for both parties.