Are you providing services related to marketing, promotion, events, or consulting? Or are you a contractor providing services to someone? This means that you are a service provider and your most important legal document is a services agreement. Luckily, services agreements are not rocket science: you should define what services you are providing, how much will it cost, when do you need to deliver your services or deliverables as well as all the general obligations related to the project or assignment. And if you don’t want to worry too much about your exposure and liability, you should also pay attention to the limitation of liability clause.
So… how should you limit your liability? There are a few commonly used practices that are widely used in commercial agreements related to services. For example, the parties may agree that the service provider’s liability shall be capped to the fees paid under the agreement, or alternatively, capped at a certain percentage of the fees (e.g. 50%). It is also relatively common practice to agree on a certain amount of money that will be the cap in respect of liability. Naturally, a good limitation of liability clause should also tackle all the issues related to direct/indirect damages as well as wilful misconduct, gross negligence, fraudulent misrepresentation, and injuries to persons. And lastly, in case the service provider is in breach of confidentiality obligation or intellectual property rights, limitation of liability should not be applicable.
To put it simply, if, for example, you limit your liability to all the fees paid under the services agreement, you may lose what you have earned. But not more. You don’t pocket anything, but you don’t lose your savings either. And if you agree on a 50% cap, you may even earn something (depending on your COGS and other overhead).
As you might have guessed already (as this is partly a marketing post) thearkhives | 奥案’s services agreement template (available as bilingual version) implements all the above (and much more) in terms of providing a neutral and safe option for service providers and customers alike.
If you need a high-quality services agreement or want to update your old practices, please do check out what we have to offer. Our templates are very reasonably priced, in addition to which thearkhives | 奥案’s templates contain all the necessary clause-by-clause drafting guidance that will help you to create and automate your legal document.
All the best,
The team at thearkhives | 奥案
