If you are a contractor, architect or engineer you know that you should have a limitation of liability clause in your contract. On the other hand, you really want to get the job and don’t want to antagonize the owner. What can you tell the Owner about why it is fair to include such a provision? Here are a few ideas.
First, risk must be fairly allocated. You are getting paid only a portion of the total project cost and only a small part of that is profit. It is not fair for your risk to be unlimited. Second, as only one of multiple project participants, you do not have complete control over all aspects of the project yet errors by others can have a substantial impact upon your work. Third, as a practical matter, you cannot risk the assets of your entire company for every project. Unless a limitation is included, you are rolling the dice on every job. Fourth, risk is best allocated through the purchase of adequate insurance. Insurers routinely assess risk in determining coverage and premiums.
Let us know what strategies you use to negotiate a limitation of liability. As a friend once said, any limitation of liability is better than nothing!