The Limits of Limitation of Liability Clauses


Limitation of liability clauses ("LOLs") have been used for years to effectively limit the potential liability of design professionals, contractors, and others. What are the requirements for a valid limitation of liability clause? In Texas, courts mandate compliance with "fair notice" requirements, which include conspicuousness of the clause.

Nevertheless, even a valid limitation of liability clause that meets the conspicuousness requirements is not iron-clad. The Texas Deceptive Trade Practices Act ("DTPA") creates an exception to these clauses. Knowing the potential limitations on limitation of liability clauses is a key to effective contract drafting that minimizes these holes in enforcement.

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