liability limitation

Liability limitation refers to a legal agreement or clause that caps the amount a party must pay if they are responsible for causing harm or damage. It sets a maximum limit on financial accountability, protecting parties from unpredictable or excessive claims. For example, in a contract, a liability limitation might specify that a company is only responsible for up to $10,000 in damages, regardless of the actual loss. This helps manage risks and provides clarity on potential financial exposure, fostering trust and encouraging business relationships by clearly defining the extent of responsibility.