11.1
Liability
High risk
Limitation of liability
Caps what each side can recover if things go wrong. The most negotiated clause in any software deal.
What this clause does
A liability cap sets the most either side can claim from the other. Vendors usually propose a cap equal to fees paid in the last few months, which can be far below the real cost of a data breach or an outage.
What Rubrel flags
Rubrel reads the cap amount, what it is measured against, and every carve-out. It flags a cap below your playbook minimum, a cap that applies to confidentiality or data breaches, and wording such as “in no event” that quietly removes indirect losses you care about.
How the redline usually lands
Most first drafts are fixed by raising the cap to 12 months of fees and adding confidentiality, data protection and indemnities to the list of exclusions. Rubrel writes that redline for you and leaves the rest of the clause alone.
Playbook positions
Standard position
Mutual cap at 12 months of fees, with carve-outs for confidentiality, data breaches and indemnities.
Fallback
Accept a 12-month cap on data breaches if the vendor carries at least $5M of cyber insurance.
Walk-away point