![]() ![]() I am often asked whether it is reasonable to ask a customer to agree to a Limitation of Liability provision in your security alarm contract, even if your company is negligent. The maximum amount that customer could recover against your company for that $1 million dollar property loss (if your company is proven in court to be at fault) is $1,000 per the Limitation of Liability provision. ![]() Your customer suffers a $1 million dollar property loss in a fire because your company negligently designed and/or installed a fire alarm system. Here is an example to illustrate how this works: Let’s assume your company has a contract with a customer that includes a Limitation of Liability provision capping damages not to exceed $1,000, even if your company is negligent. My last article on “ Understanding Third Party Indemnification Provisions” was well received – thank you! In fact, so well received that I was asked by many of you to do a similar article to discuss “ Understanding Limitation of Liability Provisions.” Ask and you shall receive!Ī well-constructed contract in our life/safety industry will include (in addition to a Third Party Indemnification provision) a Limitation of Liability provision which limits the damage ( often to as little as $1,000 or less) that can be recovered against your company by your customer, even if your company is negligent.
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