Establishing secure connection…Loading editor…Preparing document…

Limited Liability Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

LIMITED LIABILITY AGREEMENT

This Limited Liability Agreement (the "Agreement") is entered into as of (the "Effective Date"), by and between Client Name: , a , organized under the laws of , with principal place of business at ; and Service Provider Name: , a , organized under the laws of , with principal place of business at . Each of the foregoing is a "Party" and collectively the "Parties."

RECITALS

WHEREAS, Party B provides certain services and/or products described in one or more statements of work, purchase orders, or similar instruments (each a "Statement of Work") and Party A desires to procure such services and/or products from Party B under terms that allocate and limit liability between the Parties; and

WHEREAS, the Parties wish to establish an express limitation and allocation of liability relating to losses, damages, and claims arising out of or in connection with the performance of services or delivery of products by Party B;

WHEREAS, the Parties intend that this Agreement shall control and supersede any conflicting limitations of liability in any Statement of Work or other agreement between the Parties unless expressly stated otherwise in writing signed by authorized representatives of both Parties.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, the Parties agree as follows:

1. DEFINITIONS

1.1 "Claim" means any demand, suit, action, allegation, fine, penalty, or proceeding, whether civil, administrative, or criminal, asserted or commenced by any person or entity. "Losses" means damages, liabilities, costs, and expenses, including reasonable attorneys' fees and court costs.

2. LIMITATION OF LIABILITY

2.1 Except to the extent expressly excepted in Section 3 below, in no event shall either Party be liable to the other Party for any special, incidental, consequential, punitive, or exemplary damages, including but not limited to loss of profits, loss of business, loss of use, or loss of data, whether based on contract, tort (including negligence), strict liability or otherwise, even if advised of the possibility of such damages.

2.2 The aggregate liability of Party B to Party A for all Claims arising out of or relating to this Agreement, regardless of the form of action, shall not exceed the greater of (a) the cumulative fees actually paid by Party A to Party B under the applicable Statement of Work in the twelve (12) months preceding the Claim, or (b) $ .

3. EXCEPTIONS TO LIMITATION

3.1 The limitations set forth in Section 2 shall not apply to liability resulting from (a) damages arising from a Party's gross negligence or willful misconduct; (b) bodily injury (including death) or physical damage to real property; (c) breach of a Party's confidentiality obligations; or (d) indemnification obligations arising from third-party claims for intellectual property infringement where such indemnity is expressly provided under a Statement of Work.

4. INDEMNIFICATION

4.1 Each Party (the "Indemnitor") shall indemnify, defend and hold harmless the other Party (the "Indemnitee") from and against any and all third-party Claims and Losses arising out of the Indemnitor's breach of this Agreement, negligence, willful misconduct, or material violation of law; provided, however, that the Indemnitee shall promptly notify the Indemnitor in writing upon becoming aware of such Claim and shall reasonably cooperate in the defense and settlement of the Claim at the Indemnitor's expense.

5. INSURANCE

5.1 Each Party shall maintain at its own expense commercially reasonable insurance coverage appropriate to its business and the services provided hereunder, including but not limited to general liability and professional liability insurance where applicable. Upon request, either Party shall provide a certificate of insurance or other evidence reasonably acceptable to the requesting Party.

6. TERM AND TERMINATION

6.1 This Agreement shall commence on the Effective Date and shall continue in full force and effect until terminated in accordance with this Section. Either Party may terminate this Agreement for material breach by the other Party if the breaching Party fails to cure such breach within thirty (30) days after receipt of written notice of the breach.

6.2 Termination of this Agreement shall not relieve either Party of any liability that accrued prior to the effective date of termination or the indemnification obligations set forth herein.

7. CONFIDENTIALITY

7.1 Each Party shall maintain in confidence and not disclose to any third party any Confidential Information of the other Party, except as required by law or as necessary to perform under this Agreement. "Confidential Information" includes non-public business, technical, and financial information, and any other information designated as confidential.

8. REMEDIES

8.1 The Parties agree that the limitations and exclusions of liability set forth in this Agreement represent an agreed allocation of risk and reflect the consideration exchanged. Except as expressly provided, remedies under this Agreement are cumulative and in addition to any other remedies available at law or in equity.

9. NOTICES

9.1 All notices, requests, demands, and other communications pursuant to this Agreement shall be in writing and shall be delivered by hand, nationally recognized overnight courier, or certified mail (return receipt requested) to the addresses set forth below or such other address as a Party may designate in writing.

10. GOVERNING LAW

10.1 This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflicts of law principles. The Parties submit to the exclusive jurisdiction of the courts located in that State for any dispute arising under this Agreement.

11. ENTIRE AGREEMENT

11.1 This Agreement, together with any Statements of Work and schedules expressly incorporated herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals, negotiations, and communications, whether written or oral.

12. SEVERABILITY

12.1 If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be enforced to the maximum extent permitted and the remaining provisions shall remain in full force and effect.

13. AMENDMENT; WAIVER; COUNTERPARTS

13.1 No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by authorized representatives of both Parties. The failure of either Party to enforce any right shall not be deemed a waiver of that right. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

14. MISCELLANEOUS

14.1 The Parties acknowledge that they have had the opportunity to consult with counsel and that the terms of this Agreement are the result of negotiation and shall not be construed against either Party as the drafter. Headings are for convenience only and shall not affect interpretation.

Party A Printed Name:

By:

Date:

Party B Printed Name:

By:

Date:

Enter text✕

What a Limited Liability Agreement Is and when it's used

Limited Liability Agreement is a legal contract that defines limits on one party’s liability to another for specified actions, losses, or damages. It sets the scope of responsibility, allocates financial risk, and often includes indemnification and limitation clauses to cap recoverable damages. Such agreements are commonly used between service providers, vendors, contractors, and commercial counterparties to manage contract risk. When properly executed and supported by clear consideration and governing law provisions, the agreement helps clarify expectations and reduce litigation exposure.

Why parties include a Limited Liability Agreement

A Limited Liability Agreement allocates financial responsibility, reduces uncertainty in disputes, and clarifies remedies and caps on damages. It supports commercial predictability and risk management while enabling parties to set contract-specific limits consistent with applicable state law and public policy constraints.

Why parties include a Limited Liability Agreement

Who commonly signs and relies on a Limited Liability Agreement

Businesses and contractors use Limited Liability Agreements when allocating risk for services, projects, or vendor relationships, particularly in commercial contracts.

  • Independent contractors and consultants limiting liability for professional services and deliverables.
  • Vendors and suppliers specifying caps, indemnities, and warranty limits in purchase or supply agreements.
  • SaaS and technology providers defining liability for downtime, data loss, and third-party claims.

These agreements are also common where insurance interplay, indemnities, or third-party exposure make clear contractual limits necessary.

Core clauses that make a Limited Liability Agreement operational

Essential clauses that make a Limited Liability Agreement enforceable and practical include clear definitions, limits on damages, indemnities, and notice requirements for commercial relationships.

Limit of Liability

State the maximum financial exposure a party will accept. Express caps as a specific dollar amount or a multiple of fees and exclude consequential damages where agreed.

Indemnity

Define indemnification scope, including third-party claims, defense obligations, and limitations. Specify procedures for notice, control of defense, and any contribution rights between indemnitor and indemnitee.

Exclusions

List types of damages or losses that are excluded from liability, for example indirect, incidental, punitive, or certain statutory fines; ensure language complies with public policy exceptions.

Cap on Damages

Specify whether caps apply per claim, per aggregate, or per period. Indicate calculation method and whether insurance proceeds are included or excluded from the cap.

Notice

Include prompt written notice requirements for claims, timing for cure periods, and contact details for claim delivery; failure to provide notice can jeopardize indemnity rights.

Governing Law

Name the state law that will govern the agreement and the agreed dispute resolution process, such as arbitration or courts, noting enforceability varies by jurisdiction.

Step-by-step: completing a Limited Liability Agreement

Follow these steps to complete a Limited Liability Agreement accurately and reduce execution errors online.

  • 01
    Party Details: Enter full legal names and entity types.
  • 02
    Scope: Describe covered claims, excluded items, and time limits.
  • 03
    Caps/Indemnity: Specify monetary caps and contribution terms clearly.
  • 04
    Signatures: All parties sign, date, and include printed names.

Execution flow for negotiation, signature, and storage

Routing and execution flow for a Limited Liability Agreement, including review, signature, and record retention steps.

  • Prepare: Draft terms, definitions, and liability limits.
  • Review: Legal and insurance review for enforceability.
  • Execute: Signatures with witness or notarization if required.
  • Store: Save final PDF with audit trail and copies.

Configuring a template and signer workflow for repeated use

Configure template, signer order, and reminders to streamline recurring Limited Liability Agreement execution across teams.

Template settings, signer order, email reminders Configuration
Signature authentication level (email, SMS, KBA) Email link or SMS code commonly used
Field types and conditional logic Conditional fields for caps based on role
Signer order and reminders schedule Define sequential or parallel signing and reminder cadence
Document retention and storage settings Set PDF archive location and retention period

Technical and platform considerations for eSigning

Platform and integration considerations for managing Limited Liability Agreements digitally across CRM, storage, and collaboration tools.

  • Integrations: Salesforce, NetSuite, Microsoft 365 supported
  • File formats: PDF, DOCX, and fillable fields
  • Authentication options: Email, SMS, SSO available

Timing points and internal deadlines to manage

Key timing considerations, statutory deadlines, and internal reminders to track when executing a Limited Liability Agreement.

Effective Date:

Date determines when obligations and limitations begin

Notice Periods:

Specify notice windows for claims and cure periods

Renewal/Expiry:

Automated reminders recommended before renewal dates

Insurance Proof:

Require updated insurance certificates before contract start

Statutory Limitations:

Be aware limitations period varies by claim type

Milestones from negotiation through post-execution

Milestones from negotiation to post-execution for Limited Liability Agreements, shown as sequential stages to guide project timelines.

01

Negotiation

Agree on scope, caps, exclusions, and consideration terms

02

Legal Review

Insurer and counsel review for coverage gaps and enforceability

03

Execution

Signatures obtained, notarization or witness if required

04

Post-Execution

Store signed document, notify insurers, and monitor claims

Common drafting mistakes to avoid

  • Vague or missing definitions of covered claims create disputes over whether a loss falls within the liability cap or indemnity obligation.
  • Using an aggregate cap when per-claim limits are needed can expose a party to large single losses beyond intended protection.
  • Failing to align liability caps with insurance coverage leaves parties personally or commercially responsible for uncovered losses.
  • Not including clear notice and cure procedures often defeats indemnity claims and delays resolution, increasing costs and litigation risk.

Legal and commercial risks of an incorrect agreement

Unenforceable Limits: Court may void excessive caps
Public Policy: Limits prohibited for gross negligence
Insurance Gaps: May not cover excluded liabilities
Incorrect Signatures: Wrong signer can invalidate agreement
Missed Deadlines: Late notice may forfeit indemnity
State Variation: Statutory limits vary by state

How a Limited Liability Agreement differs from related documents

How a Limited Liability Agreement compares to similar contract types and when each document is appropriate.

Comparison of Limited Liability and Related Documents Document Type Primary difference
Indemnity Agreement indemnity defense and payment
Hold Harmless Clause waiver protects against claims
Insurance Policy insurance carrier pays losses
Limitation of Liability clause caps damages per claim
Release/Waiver release broad final waiver

Price and capability snapshot for common eSignature vendors

Compare starting prices and core capabilities for common eSignature vendors when executing Limited Liability Agreements to inform platform selection.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Frequently asked questions and solutions

Answers to common questions about validity, execution, and storage of Limited Liability Agreements with practical troubleshooting steps.


Need help? Contact support

be ready to get more
Join over 28 million airSlate SignNow users