4
PLAYBOOK TEMPLATES
Service Level Agreement (SLA)
An SLA establishes measurable service performance standards between provider and customer. This playbook explains methods to draft enforceable metrics, remedies for non-performance, and escalation procedures.
Limitation of Liability
Negotiation strategy
Negotiate for a liability cap that reflects the total contract value and ensure carve-outs for gross negligence. Advocate for exclusions on consequential damages to limit exposure.
Aim to keep liability caps reasonable and aligned with industry standards. Ensure that exclusions do not overly restrict potential recovery for significant breaches.
Essential elements
1
Liability Cap
Maximum recoverable damages amount.
2
Exclusion of Damages
Types of damages not recoverable.
3
Carve-Outs
Exceptions to liability limits.
Action framework
ACCEPT
Propose edits if the liability cap is too low or exclusions are too broad.
EDIT
Reject if no carve-outs for gross negligence or willful misconduct are included.
ADD
Add language for specific high-risk scenarios or additional carve-outs.
PRO TIP
Always align liability caps with the contract's financial scope and potential risk exposure.
Real-world examples
FAVORABLE
Balanced Liability Cap
"Except as otherwise provided herein, the total liability of either party for any and all claims arising out of or in connection with this Agreement, whether in contract, tort, or otherwise, shall not exceed the total amount paid or payable by the Customer under this Agreement during the twelve (12) months preceding the event giving rise to such liability."
NEUTRAL
Standard Exclusion of Consequential Damages
"Neither party shall be liable to the other for any indirect, incidental, special, consequential, or punitive damages, including but not limited to loss of profits, revenue, data, or use, incurred by either party or any third party, whether in an action in contract or tort, even if the party has been advised of the possibility of such damages."
UNFAVORABLE
Lack of Carve-Outs
"The limitations of liability set forth herein shall apply to all claims, including those arising from gross negligence or willful misconduct."
Alternative scenarios & positions
High-Risk Projects
In high-risk projects, liability provisions may need to be more stringent, with higher caps and specific carve-outs to address unique risks.
Data Breach Concerns
Contracts involving sensitive data should include specific liability terms for data breaches, potentially with higher caps or additional remedies.
International Agreements
International contracts may require adjustments to liability terms to account for differing legal standards and enforcement challenges.
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WEEK 1
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WEEK 2
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WEEK 3
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WEEK 4
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