limitation (noun, lim-i-ta-tion, \ ˌlɪmɪˈteɪʃən \) of liability (noun, li-a-bil-i-ty, \ ˌlaɪəˈbɪləti \)
Definition: is a clause, a rule that establishes a business representative’s responsibility (legal or financial) for damages or losses. The limitation of liability may reduce the level of responsibility or eliminate it overall in case of direct damages, consequential, incidental ones, etc. Oftentimes, the limitation of liability serves to balance out the contracts, in which the risk is potentially immense and the profit for performing the contract is relatively small. In such a case, the limitation of liability lowers the risks and allows a business to balance out the contract conditions.
In a Sentence:
- The limitation of liability protects the manufacturer if an accident during equipment testing occurs.
- You need to sign the limitation of liability clause if you want to protect yourself from risks and potential damage your company may face.
- The limitation of liability reduces the engineer’s responsibility for this project.
Synonyms and related words: limitation of liability clause, liability limitation, limited liability, business liability, limited liability company