Limitation of liability clause for freelancers: what it does and sample wording

By SoloWOS teamPublished October 19, 2026Updated October 23, 2026

IN SHORT

A limitation of liability clause caps how much a freelancer can owe if something goes wrong, commonly at the fees the client paid under the contract, and usually excludes lost profits and other indirect damages. Courts generally won't enforce it for fraud, intentional harm or gross negligence, so it limits ordinary mistakes, not misconduct.

Prices and limits as of October 26, 2026.

Key takeaways

A cap equal to the fees paid (or paid in the last 12 months) is the common freelance starting point; some clients ask for a multiple, such as 2x.
Excluding indirect and consequential damages (lost profits, lost data, lost business) often matters more than the cap itself.
California Civil Code § 1668 voids clauses that exempt anyone from their own fraud, willful injury or violation of law; in 2025 the California Supreme Court held that a cap on damages for willful injury is invalid too.
New York courts don't enforce exculpatory clauses against conduct that smacks of intentional wrongdoing (Kalisch-Jarcho, 1983), though in pure contract cases that rule now targets clauses that wipe out liability, not ordinary caps.

This page is general information, not legal advice. The cases and statutes cited were checked against official and court sources on October 23, 2026, but no lawyer has reviewed it. Enforceability depends on the state, the wording and the facts. For a large contract, or if a client's paper removes your cap, ask a business or contracts attorney licensed in your state.

A $2,500 website project shouldn't expose you to a $250,000 claim because the client's store went down for a weekend. The liability clause is what stops that. It sits next to the ownership clause in most client redlines; see work for hire vs assignment for that one, and the independent contractor agreement guide for the full contract. It's part of our contracts and signatures guides.

What the clause does

A cap: the most either party can owe the other under the contract, in total.
An exclusion: categories of damage nobody can claim, usually indirect, consequential, special and punitive damages, including lost profits and lost data.
Carve-outs: things the cap doesn't cover, such as unpaid fees, breach of confidentiality, or infringement you caused.

Common caps, with numbers

Typical cap formulas for a freelance project, applied to a $12,000 six-month retainer ($2,000 a month) with $8,000 paid when the problem happens
Cap formula	Cap in this example	When it fits
Fees paid under the contract	$8,000	Default for most freelance work
Fees paid in the 12 months before the claim	$8,000 (all fees so far)	Long retainers, so the cap doesn't grow forever
Total contract value	$12,000	A client asking for more comfort on a fixed-price project
2x fees paid	$16,000	Higher-risk work (data, payments, regulated clients); price it in
Your insurance limit	Whatever your policy covers	If you carry professional liability insurance and the client requires it
No cap	Unlimited	Avoid; at least exclude indirect damages

What courts won't enforce

Liability caps are generally enforced between businesses that agreed to them, but every state has limits. In California, Civil Code § 1668 says contracts that exempt anyone from responsibility for their own fraud, willful injury to the person or property of another, or violation of law are against public policy. In 2025, in New England Country Foods v. VanLaw Food Products, the California Supreme Court held that a limit on damages for willful injury is invalid under § 1668, while confirming that parties can still limit liability for pure breaches of contract. In New York, Kalisch-Jarcho v. City of New York (1983) is the case courts cite for refusing to enforce an exculpatory clause when the misconduct smacks of intentional wrongdoing, and later cases apply it to gross negligence. In Matter of Part 60 Put-Back Litigation (2020), the Court of Appeals narrowed that for pure breach-of-contract claims: gross negligence voids only clauses that remove liability entirely or leave nominal damages. Other states follow their own lines.

The practical reading: a cap protects you from an honest mistake (a bug, a missed deadline, a typo in printed material). It won't protect deliberate or reckless conduct, and the clause shouldn't try to, because over-broad wording invites a court to look harder at the whole clause.

Sample wording

Limitation of liability (mutual)

LIMITATION OF LIABILITY
(a) Cap. Except as stated in (c), each party's total liability arising out of or related to this Agreement, whether in contract, tort or otherwise, will not exceed the fees paid and payable to Freelancer under this Agreement in the [12] months before the event giving rise to the claim.
(b) Excluded damages. Except as stated in (c), neither party is liable for indirect, incidental, special, consequential or punitive damages, including lost profits, lost revenue, lost data or business interruption, even if advised of their possibility.
(c) Exceptions. (a) and (b) do not apply to: Client's obligation to pay fees; a party's breach of the confidentiality section; a party's fraud, gross negligence or willful misconduct; or anything that cannot be limited under applicable law.
(d) Allocation. The parties agree that the fees reflect this allocation of risk.

Make it mutual. A one-sided cap that protects only you is harder to get signed and easier to attack.
Keep unpaid fees outside the cap, or the client could argue it owes you no more than it already paid.
Watch for clients who carve out "any breach of warranty". That removes the cap for most real claims.
Put the clause in capitals or bold if your state requires conspicuous wording for some limitations; ask a lawyer in your state.

WORKED EXAMPLE

A $4,800 online store build

A developer builds a store for $4,800. Three weeks after launch, a plugin update she installed breaks checkout for a weekend; the client says it lost $22,000 in sales and wants that back. Under the clause above, lost profits are excluded under (b), and any direct damages, such as the cost of the fix by another developer, are capped at $4,800 under (a). Without the clause, she would be arguing about the $22,000 figure. She still fixes the bug at no charge, which is what the warranty in her contract promises.

When a client sends their own clause

Check whether the cap applies to both parties.
Look for an indemnity section that sits outside the cap. Indemnities for your own infringement are normal; indemnities for "any claim related to the services" are not.
Compare the cap to the fee. A cap of $1 million on a $3,000 project is in practice no cap.
If they won't move, ask whether they require insurance and price the project to cover a professional liability policy.

In SoloWOS

SoloWOS doesn't write contracts or give legal advice. Once the clause is in your contract, send the PDF for e-signature so both parties sign the version with the cap, and keep the audit trail. Our freelance contract template includes a short liability section to start from. For repeat clients, the clause belongs in the master agreement; see MSA vs SOW.

Questions

What is a reasonable liability cap for a freelancer?

The fees paid under the contract, or paid in the 12 months before the claim, is the common starting point. Clients with higher risk may ask for a multiple. A cap far above the fee doesn't protect you in practice.

Are limitation of liability clauses enforceable?

Generally yes between businesses that agreed to them, with limits. Courts usually won't apply them to fraud, intentional harm or gross negligence. California's § 1668 is one example; check your own state.

What's the difference between a liability cap and an indemnity?

A cap limits what one party can recover from the other. An indemnity makes one party cover the other's losses from third-party claims. If the indemnity sits outside the cap, it can expose you to unlimited amounts.

Do I still need insurance if I have a liability cap?

A cap reduces the amount at risk, but it doesn't pay a lawyer or a settlement. Professional liability insurance does. Some clients require it regardless of the cap.

Sources

Facts checked against these sources on October 23, 2026. Rules and amounts change, so confirm them at the source before you file or sign.

Last reviewed: October 23, 2026

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