Limitation of liability clause

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Overview
A limitation of liability clause permits contracting parties to reduce the potential for consequential, special, incidental and indirect damages should there be a breach of contract. In some cases, a cap on damages is also used.

The U.C.C. does not contain a requirement that the damage limitations clause be conspicuous. Nevertheless, using capitalization and boldface type may avoid an argument that the limitation was hidden.

Sample clause
IN NO EVENT WILL COMPANY BE LIABLE TO YOU FOR ANY LOST PROFITS, LOST SAVINGS OR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF YOUR USE OR INABILITY TO USE THE PRODUCT OR THE BREACH OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SOME STATES DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO YOU.