Liability
What you can be held responsible for if the work causes harm — and, in a contract, how much of that you have agreed to carry.
Liability is responsibility for loss or damage arising from your work. In an agreement it appears in two places worth reading carefully: a cap, which limits the total you can be asked to pay, and an indemnity, which is a promise to cover someone else's costs if a defined thing happens.
The commercial point is proportion. A $6,000 project carrying uncapped liability means a single bad outcome can exceed the value of every project you will run this year. Caps commonly sit at the fees paid under the agreement, or a multiple of them, and asking for one is a normal negotiation rather than a sign of doubt about your own work.
The clause that catches people out is the indemnity, because it can extend beyond your own conduct. An indemnity covering claims arising from delivered materials can make you responsible for a subcontractor's decision or a stock image licence you never inspected — which is why it belongs in the same conversation as who owns the output and who you brought in to produce it.
Insurance and contract terms interact differently in every jurisdiction, and what is standard varies by industry. Read the cap and the indemnity in any agreement you sign, and have both reviewed by a qualified professional where you operate.
Also known as
- liability cap
- indemnity
- exposure
Relevant for
- Business owners
- Uncapped liability on a small project means one bad outcome can exceed a year of revenue — ask for a cap at the fees paid; it is a normal negotiation, not an admission.