Limitation of liability clause present and reasonable

Without a limitation of liability clause, your business has uncapped financial exposure to every user who suffers any loss — real or alleged — while using your service. A single lawsuit for consequential damages (lost business, lost data, lost revenue) can exceed the total revenue your product generates. EU-CRD-Art-25 permits businesses to limit liability to reasonable amounts, but only when the limitation is clearly stated in the contract. US courts generally enforce liability caps when they are conspicuous (written in ALL CAPS) and not unconscionably low. A missing clause means courts will apply the default — which is full compensatory damages with no cap.

Add a limitation of liability section to your Terms of Service. Write it in ALL CAPS — US courts require conspicuousness for enforceability, and all-caps is the established convention.

## LIMITATION OF LIABILITY

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT WILL [COMPANY],
ITS OFFICERS, DIRECTORS, EMPLOYEES, OR AGENTS BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES — INCLUDING LOSS OF
PROFITS, DATA, USE, OR GOODWILL — ARISING OUT OF YOUR USE OF THE SERVICE.

[COMPANY]'S TOTAL LIABILITY FOR ANY CLAIMS ARISING FROM THESE TERMS IS LIMITED
TO THE GREATER OF: (A) AMOUNTS YOU PAID IN THE PRECEDING TWELVE (12) MONTHS,
OR (B) $100 USD.

SOME JURISDICTIONS DO NOT ALLOW THESE LIMITATIONS. IF THESE LAWS APPLY TO YOU,
SOME OR ALL OF THE ABOVE MAY NOT APPLY.

Have a lawyer confirm the enforceability of this clause in your target jurisdictions — EU consumer protection law (EU-CRD-Art-25) imposes additional constraints for B2C contracts.