Recruitee

The limitation of liability clause is the one everyone talks about...and hardly anyone truly understands. In SaaS negotiations, it's often the longest item in the redline. Understandably so: this is where it's decided who is liable for what in a worst-case scenario. But the discussion almost always comes down to the same question...and it's the wrong one. ❌ The wrong question: "What is the liability cap?" ✅ The right question: "What does it actually apply to?" Three things that really matter in practice 👇🏼 → Which damages are excluded? Consequential damages, indirect damages, lost profits. These standard exclusions are in almost every SaaS contract. This is industry-standard, but not without alternatives. → What remains unlimited? Intentional misconduct, gross negligence, data protection breaches...the cap should never apply here. Any provider insisting on a cap here doesn't understand their own risk. → The relationship to the fee. A cap equivalent to the annual contract value is standard. A cap below 50% of the annual value is a warning signal—either about the provider or about the provider's own risk assessment for their solution. My take: A good liability clause is not a shield for one of the parties. It's a realistic reflection of the shared risk. If both parties feel they've been treated fairly by the end of the negotiation, you've done it right.