Answered question · Dec 26, 2025
Is a 12-month liability cap tied only to fees paid standard for SaaS?
An anonymized real-world question about commercial contract risk. This breakdown focuses on practical, commercial impact — not case law, and not a substitute for a full contract review.
Plain-English snapshot
A liability cap of 12 months tied only to fees paid can present significant risks for a SaaS vendor. While some customers may view this as a standard request, it can limit your exposure in ways that may not adequately protect your business.
Full commercial-risk breakdown
A liability cap of 12 months tied only to fees paid can present significant risks for a SaaS vendor. While some customers may view this as a standard request, it can limit your exposure in ways that may not adequately protect your business.
Key Risks:
- Limited Recovery: If a significant issue arises, your ability to recover damages may be severely restricted, especially if the relationship ends early or usage declines.
- No Carve-Outs: The absence of exceptions for data protection or confidentiality breaches means you could be liable for substantial damages without recourse.
- Exclusion of Indirect Damages: This could leave you vulnerable to claims that arise from loss of business or reputation, which can be hard to quantify but impactful.
Practical Guidance:
- Negotiate for a Higher Cap: Consider pushing for a cap based on total fees payable rather than only those paid, which provides a more balanced risk profile.
- Include Carve-Outs: Advocate for specific exclusions for data breaches and confidentiality violations to ensure you have adequate protection.
- Consider Tiered Caps: Propose a tiered liability structure that increases with the severity of the breach or issue, offering more flexibility and protection.
Not legal advice.
Evaluating a limitation of liability clause?
Small wording changes can materially shift downside exposure. For a fast commercial-risk breakdown, run the clause through the Clarioso Liability Analyzer.