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What does a “Limited Liability” clause do?

In the wedding and event industry, breach of contract actions against wedding vendors are one of the most prevalent forms of lawsuits. And in a breach of contract action, an angry client is going to try to get as much money out of you as possible. Why wouldn’t they? If you’re a wedding professional, you’re probably a millionare, amirite?

If the client brings a breach of contract lawsuit, the law is going to provide them with compensatory damages, meaning damages that flow reasonably from the breach. So for example, if you’re a wedding photographer and let’s say you miss the last hour, the bride is going to sue and be able to get whatever value that last hour is, or if you’re a DJ and you miss the last hour. Maybe, as a planner, you are an hour late, and it causes the event to go an hour later, causing a chain reaction of anguish that forces the client to pay for all the other vendors for another hour. Or, you’re a florist and you don’t supply all the bridal bouquets as ordered, or they are in the incorrect color or type. Whatever. I don’t know flowers.

At the end of the day, the disgruntled client’s lawyer is going to try to quantify that as best they can.

Sneaky lawyers (like me) are going to try to get more damages than that.

So, one of the key contractual provisions that you want to consider having in your client contract is called a limited liability clause. Limited liability basically says, no matter what type of lawsuit that is filed, the damages that the client can receive is limited to XYZ. Often, limited liability clauses will limit the damages available in a lawsuit to the amounts actually paid to the vendor.

So let’s say that the contract value is $5,000. If you heinously mess up, don’t show up, or something similar, then the amount of money that court is going to be able to award is $5,000. DISCLAIMER: This is not the same from state to state and will NOT apply to certain claims. For example, if you beat the crap out of the client, they WILL BE ABLE TO SUE YOU FOR LOTS MORE THAN $5000.

The public policy behind the limited liability clause is that business owners should limit damages only to those that are truly foreseeable and flow naturally from the breach. Understanding non-economic damages, like pain and suffering, is difficult to assess, and therefore attempt to mitigate through insurance, policies, etc.

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