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Try-it exercise

Spot the missing carve-out

Practice on an invented clause, with no client documents and nothing to upload. Read the clause and the AI summary below, find what the summary leaves out, then open the reviewed answer to compare.

All documents and facts on this page are invented. This is legal information, not legal advice; review every output before relying on it.

The clause (invented)

CLAUSE

10. LIMITATION OF LIABILITY

10.1 Except as provided in Section 10.2, neither party's total liability arising out of or relating to this Agreement will exceed the fees paid or payable by Customer in the twelve (12) months before the event giving rise to the claim.

10.2 The limitation in Section 10.1 does not apply to (a) a party's indemnification obligations under Section 11; (b) Customer's obligation to pay fees; or (c) a party's gross negligence or willful misconduct.

10.3 In no event will either party be liable for any indirect, incidental, special or consequential damages, or for lost profits, even if advised of their possibility.

The AI summary

SUMMARY TO REVIEW

Summary of Section 10: Each party's liability is capped at twelve months of fees. Neither party is liable for indirect or consequential damages or lost profits. Indemnification and gross negligence are excluded from the cap.

Your task

  1. List every exception to the cap in Section 10.2 and check each one against the summary.
  2. Check whether the exceptions in 10.2 also apply to the exclusion in 10.3.
  3. Write one sentence that corrects the summary.
Show the reviewed answer

What is missing. The summary drops one carve-out from the cap: (b) Customer's obligation to pay fees. It also merges (c) into "gross negligence" and leaves out willful misconduct.

The point most reviewers miss. Section 10.2 lifts the cap in 10.1 only. It says nothing about 10.3, so the exclusion of indirect and consequential damages and lost profits still applies even to indemnification claims and to gross negligence. If indemnified losses are likely to be lost profits or consequential damages, the indemnity may be worth much less than it looks.

A corrected summary. "Liability is capped at twelve months of fees, except for indemnification, Customer's payment obligations, and gross negligence or willful misconduct; the exclusion of indirect and consequential damages and lost profits in 10.3 has no exceptions, so it applies to those claims too."

Every ProvisoIQ pack opens with a section on what to check, built from errors like these. See the mistakes gallery for more.

Use this on your own work

Free: Contract review checklist. Paid: Commercial Contracts Starter Pack.

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