LEXR’s Post

FRIDAY FOR FOUNDERS – LIABILITY Hello Founders! 👋 Welcome back to Friday for Founders! Today, we’re looking into the limitation of liability. Such a clause defines the extent to which a party is responsible for damages caused to another party, such as through a contract breach. These clauses can help protect your business from significant financial risk. Why limit your liability? ➡️ Without a limitation of liability, a single major incident could seriously harm or even bankrupt your company. ➡️ A limitation ensures your exposure is manageable and within commercially acceptable boundaries. ➡️ However, overly restrictive clauses might scare off potential customers — balancing protection with negotiation flexibility is key. ⚠️ Your liability clause must always explicitly state that the liability remains unlimited for willful or grossly negligent breach of the agreement or the law and for bodily harm. If this is not explicitly mentioned, there's a significant risk that a court would rule that the whole liability clause is not valid, leaving you fully liable for all damages. How to structure a liability clause? 1️⃣ Mandatory liability: Liability cannot be excluded for intentional or grossly negligent breaches and bodily harm. 2️⃣ Capped liability: Limit liability to a fixed amount (e.g., CHF 100'000) or to the total amount due by the customer in the 12 months before the liability event. 3️⃣ Excluded liability: Exclude liability for all other damages, including indirect or consequential damages (e.g., loss of profits, reputational harm). Got questions or need advice? Check out our free guide here (https://shorturl.at/Oyd3n) and feel free to reach out to me via DM. 📩 Next week in Episode 20: We’ll dive into how to terminate an employment agreement.   Stay tuned and see you next week! #FridayForFounders