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Should I worry about a contract clause that says the other party isn't liable for damages?

Yes, you should worry—but not panic. Limitation of liability clauses show up in contracts all the time, and they're not automatically a deal-breaker. The real question is whether that clause actually protects you or leaves you hanging.

What is a limitation of liability clause?

This is language that says one party (usually the other side) won't be responsible for certain kinds of damages if something goes wrong. For example, a software vendor might say they won't pay for "indirect damages" if their product fails. Or a contractor might limit their liability to the amount you paid them.

These clauses exist because businesses want to manage their risk. That's normal. But "normal" doesn't mean it's fair to you.

When should you actually worry?

You need to dig deeper if the clause:

  • **Covers everything.** Some contracts try to wipe out all liability for any problem. That's a red flag.
  • **You didn't negotiate it.** If you just signed a take-it-or-leave-it contract, you may have stronger arguments if the clause is unreasonable.
  • **Covers gross negligence or intentional wrongdoing.** Many states won't enforce clauses that shield someone from their own reckless or deliberate conduct.
  • **Is unclear about what it actually excludes.** Vague language works against whoever wrote the contract.

    • Why some clauses don't hold up in court

    Utah courts, like courts nationwide, sometimes refuse to enforce limitation of liability clauses if they're unreasonable given the circumstances. Courts look at whether the clause was something you actually agreed to, whether you had a real choice, and whether enforcing it would be unfair.

    For instance, if you hired a contractor and they damaged your property through carelessness, a clause saying "we're not liable for any damage" probably won't protect them. But a clause limiting liability for a specific, foreseeable type of loss might stand up just fine.

    What you should do

    Don't just accept a limitation of liability clause as written in stone. Here's the smart approach:

    Before you sign: Ask what the clause really means. Does it limit liability for everything or just certain losses? Are there exceptions? Can you negotiate it to be more balanced?

    If you're already signed: Review the exact language. What damages are actually covered? What happens if the other party causes serious harm?

    When you're unsure: Get a lawyer's eyes on it. A clause that looks harmless might have teeth you don't see, or a clause that looks scary might not actually be enforceable against you.

    About The Law Office of Bobby Udall

    The Law Office of Bobby Udall in Salt Lake City helps clients understand and negotiate contracts before problems arise. If you have questions about a limitation of liability clause or any other contract language, reach out to discuss your situation.

    Visit https://bobbyudall.com for more information.

    The Law Office of Bobby Udall
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