Negotiating Limitation of Liability Clauses: Customer Arguments

Why customers want to limit liability in their purchasing contracts

Customers frequently use some arguments when negotiating limits of liability.

Customers often buy from vendors that are the last in a long chain of vendors to the product. Customers must look to just the vendor for most of the liability shifting because it has no privity of contract with the other vendors.

On top of that, some customers are the last in the line before a product reaches the consumer. The law limits how much a vendor to consumers can insulate itself from liability so that last purchaser before the consumer sits with a lot of risk.

It is no wonder that customers try to preserve as many remedies as they can in their contracts. They know otherwise, they may be left holding the proverbial bag.

Scripts for Negotiating Limitations of Liability Clauses

Here are some common arguments customers make to their vendors during negotiations:

1. You are selling a product, so you should bear all the risks relating to what you sold us.

2. We should not have any liability for problems with what you provide to us.

3. We accept liability from our customers when we sell. We can't also take on your liability when we purchase from you. 

4. We are partly paying you to stand behind your product and take the risks.

5. You, as the seller, are in a better position to mitigate and manage risks.

Other Resources on Limitation of Liability Clauses 

• How to Contract
  • Limitation of Liability Learning Hub
  • Courses on Limitation of Liability
• Other articles
  • "Ten Ways Your Limitation of Liability Provision Is Actually Ineffectual" by Alexandra J. Gage and Sara E. Potts, Attorneys of Doerner, Saunders, Daniel & Anderson, LLP 
  • Limitation of Liability Sample Clauses from Law Insider