Damage Limitation Clauses

These broad clauses are often used by companies to shift the responsibility for mistakes or errors in performing the terms of the contract. One example of this is in a typical contract for real estate appraisal. These contracts will often have clauses that limit the appraiser’s liability for mistakes to a refund of the amount paid to the appraiser under the contract. If a mistake is made due to the appraiser’s negligence, that mistake may result in thousands of dollars in additional costs for the consumer. If the consumer is limited to a refund from the appraiser for a fraction of those additional costs, they may be left paying for the appraiser's negligence. In this scenario, the consumer’s only fault may be signing a contract with a limitation of damages clause.