This post is based on a question about limitation of liability that I answered on Quora.
Q. Why do technology contracts often carve breach of confidentiality out of the limitation of liability?
A. I’m going to start by broadening the discussion, a bit.
First, the carve-outs typically modify both limitation of liability and limitation of damages. So, whereas an agreement might include provisions both limiting? the total (dollar) amount of liability and liability for consequential damages, such limitations will not apply to the carved-out subject matter.
From time to time, I answer questions – typically about the law or about startups – on LinkedIn. Recently I answered the following question:
What is the best way [in a contract] to limit liability when you’re the party receiving payment?
I believe the answer will be helpful to any supplier of goods or services, so I am reproducing it here in slightly edited form.